Just 41% of workers surveyed have ever tried to calculate how much they’ll need to save in order to live comfortably in retirement.
If you ask employees about their retirement confidence, you
might be surprised to learn that 60% of American workers are confident in their
ability to live comfortably in retirement, and 18% feel very confident,
according to the 2017 Employee Benefits Research Institute (EBRI) Retirement
Yet 47% of the same workers surveyed say that they have
little or no money in savings and investments. Those workers are reporting the
total value of their savings and investments, excluding home value and defined
benefit plans, is under $25,000. Of that 47%, 24% are reporting less than
$1,000 in savings.
It’s not as though they’re trying to figure it out, either.
The same EBRI survey reveals that just 41% of workers surveyed have ever tried
to calculate how much they’ll need to save in order to live comfortably in
retirement. Of those who have tried, 64% say they’ll need an estimated $500,000
or more in order to live well in retirement.
That gap is a wake-up call that many plan participants have
yet to make. For retirement advisors, it’s an opportunity to fill a critical
need for participants and help them speed their savings and find their way to
investment portfolio. Your plan participants may be investing in safe
options when aggressive ones would suit, or they could be going with higher
risks at a time in their lives when lower would be better. Help participants
understand the different scenarios so that they make an informed choice.
readiness assessments. Show your plan participants how their current
investment portfolio matches their needs. Is their portfolio set up in order to
replace 80 percent of their income at retirement? Examine current salary (as
well as any expected raises), current rate of retirement saving, how much the
employer contribution adds, current plan balances, Social Security benefits,
what they estimate they’ll need, and what their income might look like during
retirement. Also look at when the participant intends to retire, or for younger
employees, how many years they intend to work.
Bump up plan
contributions. The easiest way to get retirement savings moving in the
right direction is to determine the plan participant’s current retirement
contribution and help them settle on a percentage increase that makes sense
given their current salary and financial obligations. Even a bump of one
percent per year can make a significant impact on the participant’s overall
participants the right tools. It’s easier for employees to visualize the
impact of their savings if they have an online portal from which to view and
manage their investments. Advisors can walk participants through the basics,
and offer more personalized tutorials for those wanting more help.
investment information. Articles aimed at boosting savings for older
workers may fall flat if the majority of your plan participants are in their
30s. Likewise, articles dealing with how to adopt an aggressive investment
strategy may not fit the over-50 employees. Help plan sponsors target their
communications to various segments within the employee population to ensure that
all employees receive more targeted messaging.
What other methods have you used to help plan participants close the gap?
Before leaping into the unknown, we recommend a thorough examination of your plan. Because we are experts in the field, we know the marketplace and know what your existing vendor is capable of offering. Through this examination, we can help you optimize the service you receive.get xpress proposal