401(k) Plan Design Tweaks That Can Drive Big Results

As a retirement plan sponsor, you have a powerful role in shaping how well your employees prepare for retirement. The good news? You don’t have to reinvent your 401(k) plan to make a meaningful impact. Sometimes, small design tweaks can drive big results both for your employees’ financial futures and your plan’s overall success.

Here are four proven strategies worth considering:

1. Auto-Enrollment: Helping Employees Get Started

One of the biggest hurdles employees face is simply getting started. Auto-enrollment helps solve this by automatically enrolling eligible employees into the plan unless they choose to opt out.

Why it works:

• Removes inertia. Many employees intend to save but never get around to it.

• Boosts participation. Plans with auto-enrollment often see participation rates jump by 20-30%.

• Supports retirement readiness. The earlier employees start, the more time compounding can work in their favor.

Pro-Tip: Set a default contribution rate high enough to make an impact. While 3% is common, many employers are now starting at 6% or more.

2. Auto-Escalation: Turning Small Starts Into Big Savings

Getting employees into the plan is step one, but helping them build up to meaningful savings levels is step two. That’s where auto-escalation comes in.

How it works:

• Employees are automatically enrolled in annual contribution increases (for example, 1% each year) until they reach a preset cap, such as 10% or 15%.

• The increases are small enough that employees barely notice, but powerful enough to grow balances significantly over time.

Auto-escalation can be the difference between employees retiring on schedule or working years longer than they planned.

3. Roth 401(k) Option: Tax Diversification for the Future

Many employees don’t realize that their retirement tax bill could be just as important as the size of their nest egg. Offering a Roth 401(k) option gives them more control.

Why it matters:

• Tax diversification. Roth contributions are made after-tax, so qualified withdrawals in retirement are tax-free.

• Flexibility. Younger employees, who may be in lower tax brackets now, often benefit most from Roth savings.

• Retention tool. More and more workers expect modern retirement plans to include Roth options.

Encouraging employees to consider both pre-tax and Roth contributions helps them balance tax strategies for their future

4. Re-Enrollment: Giving Employees a Fresh Start

Even the best-designed plan can get stale if employees stick with outdated choices. Re-enrollment is a powerful reset.

How it works:

• Employees are automatically moved into the plan's Qualified Default Investment Alternative (QDIA), often a target-date fund, unless they actively opt out or select a different investment.

• This can correct old allocation mistakes, like employees sitting in cash or overly conservative funds.

Re-enrollment helps ensure that participants’ investments align with their retirement goals, not just decisions they made years ago.

Small Tweaks, Big Impact

When it comes to retirement plans, sometimes the smallest adjustments can create the biggest improvements. By adopting tools like auto-enrollment, auto-escalation, Roth options, and re-enrollment, you not only help employees build stronger financial futures, you also strengthen your plan’s performance and demonstrate your commitment as a fiduciary.

Bottom line: These are not just “nice-to-haves.” They are proven levers that can increase participation, improve savings rates, and put employees on track for retirement readiness.

Click HERE to access our Checklist for Plan Sponsors

Scott Higgins | AIF ®, CFP®, CPFA®, NSSA®

Financial Advisor

Securities and Investment Advisory Services Offered Through M Holdings Securities, Inc., a Registered Broker/Dealer and Investment Adviser, Member FINRA/SIPC. Rose Street Advisors is independently owned and operated. #4786058

Beyond the Numbers: Envisioning Your Retirement Lifestyle

When people think about retirement planning, the first question is often, Do I have enough money? While financial readiness is crucial, an equally important, yet often overlooked, aspect is the emotional side of retirement.

What will our days look like? How will you find purpose and fulfillment? Who will you spend your time with? These are questions that can shape your retirement just as much as your savings balance.

The Emotional Side of Retirement

For decades, work has provided structure, social connections, and a sense of purpose. When you retire, that daily rhythm changes. Many retirees experience a honeymoon phase filled with travel and relaxation, but after a while, some feel restless, lonely, or even lost. The key to a fulfilling retirement is planning not just for your finances, but for your life.

1. Purpose and Identify: Who Are You Without Work?

Your career likely provided a sense of accomplishment. In retirement, it's important to replace that with meaningful activities.

Action Steps:

• Explore your passions. What activities have you always wanted to try?

• Volunteer: Giving back can provide a renewed sense of purpose.

• Consider part-time work or consulting. This can keep you engaged while offering flexibility.

2. Social Connections: Who Will You Spend Time With?

Work naturally creates social interactions. Without it, some retirees struggle with loneliness. Studies show that social isolation can impact both mental and physical health.

Action Steps:

• Strengthen existing relationships. Plan regular meetups with friends and family.

• Join groups or clubs. Book clubs, fitness groups, or hobby clubs can help build new connections.

• Stay involved in your community. Places of worship, senior centers, or volunteer organizations can provide a sense of belonging.

3. Health and Wellness: How Will You Stay Active?

Your health is your most valuable asset in retirement. Without the structure of a work schedule, it's easy to fall into a sedentary lifestyle.

Action Steps:

• Create a fitness routine. Walking, yoga, or strength training can keep you active.

• Prioritize prevention care. Schedule regular checkups and screenings.

• Focus on mental wellness. Try meditation, learning new skills, or engaging in activities that keep your brain sharp.

4. Daily Routine: How Will You Structure Your Time?

Without a work schedule, days can feel long or unproductive. Having a sense of structure can make retirement feel more fulfilling.

Action Steps:

• Establish a morning routine. A consistent start to your day sets a positive tone.

• Plan weekly activities. Schedule time for exercise, hobbies, and social outings.

• Set goals. Whether it's reading a certain number of books, learning a new skill, or traveling, having goals keeps life exciting.

Start Envisioning Your Retirement Now

A fulfilling retirement doesn't happen by accident, it requires planning beyond just the numbers. Take some time to reflect:

1. What excites you about retirement?

2. What hobbies or interests do you want to pursue?

3. Who will be part of your daily life?

4. How will you maintain your physical and mental health?

Final Thought: Retirement is a New Beginning

Retirement isn't the end of something, it's the start of a new chapter. By thinking about your life in retirement as much as your finances, you can create a future that is not only financially secure but also deeply fulfilling.

What does your ideal retirement look like? Start shaping it today.

Scott Higgins | AIF ®, CFP®, CPFA®, NSSA®

Financial Advisor

Since 2012 at Rose Street, Scott has been responsible for helping the firm’s individual wealth management clients with income strategies for retirement and consulting with employers with their employee retirement plans. In free time, he enjoys golf, biking, skiing, cooking, and traveling. Fun Fact, Scott has a hobby of filling growlers with coins!