Lower-earning workers have the same retirement savings needs as anyone, but they struggle with challenges that higher-earning workers may not. In this white paper, BOK Financial® experts address some of these challenges and explain how through engagement plan sponsors can help low-earning workers overcome these obstacles. By doing so, plan sponsors can provide better equity for workers from diverse income groups and cultural backgrounds.

Workers in low-wage, manual labor jobs are increasingly becoming the least prepared for retirement. Whereas one in five low-income households had a retirement account balance in 2007, that figure dropped to one in 10 low-income households in 2019. By comparison, nine in 10 high-income households had a retirement account balance over that same time frame. As a result, low-income workers, who often work in manual work that takes a physical toll on their bodies, may be financially unable to retire or, if they do retire, unable to live financially independently.

'Oftentimes low-income workers lack financial literacy or have a lack of understanding about retirement savings options. This lack of knowledge can hinder their ability to make informed decisions about saving for the future,' said Brandy Marion, Institutional Wealth education manager at BOK Financial. However, it doesn't have to be this way, experts agreed. Instead, plan sponsors can proactively take steps to engage with these workers and help them participate in plans that will put them on the right path toward retirement. Be familiar with their individual financial circumstance, including challenges. For example, some low-earning workers may be living paycheck to paycheck or have unstable incomes.

'If they're not earning enough to address their immediate needs such as shelter and food, they may not be thinking about retirement,' she noted. Plan sponsors can still engage with workers in these situations. However, it must be in ways that are mindful and sensitive to their concerns and needs. For example, employers can set low-earning workers up with financial advisors or coaches that can help them on an individual basis to create or review their budgets or use a paycheck calculator to show them the value of making a pre-tax retirement contribution, Marion suggested.

'Engagement is the key,' said Jhoanna Astudillo, Hispanic segment leader for consumer banking at BOK Financial. 'If a workforce is not engaged, they're not even going to look at their employer-sponsored benefits, especially retirement savings plans, because they're not looking at their employer as their journey. They're viewing it as only a step on their journey.'