Educate Your Employees on Compounding

July 31, 2017 Research

Articles for Research

Your employees may not know that they have a silent but powerful ally on their retirement preparation journey through the effects of compounding. With this mini-education campaign, you can help your participants understand how important it is not to delay and start participating in their retirement plan earlier.  

In a OneAmerica® participant survey, we found that only 27% of those surveyed were very or somewhat knowledgeable about the compounding effects of their retirement account contributions. By educating participants on the concept of compounding, they will understand how important it is to start participating in their retirement plan earlier.

How does compounding work? When your employees invest money, their money has the potential to earn a return. In its simplest form, compounding means that your employees earn money on both their investments and the earnings on those investments. Compounding is the growth of these earnings.

One of the best environments for compounding is your retirement plan. Why? Compounding needs time to work, and while your employees are working, their money has time to grow. The sooner your employees contribute to the plan, the sooner their money can grow.

This is a powerful concept that once learned can help change retirement preparation behavior. To help educate your employees and motivate them to participate in the retirement plan, you can develop a communication campaign with the following materials.

Plan Sponsor Guide

Power of Compounding Infographic

Cost of Waiting Calculator

Why Hitting the Match Matters

Importance of Starting Early Video



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