An organization’s retirement program should provide multiple support mechanisms that promote financial wellness for workers of all ages. Today, many employers offer employees a plethora of modeling tools, retirement calculators, financial advice alternatives, educational seminars, and employee meetings/events, in an effort to make available the information needed to plan for retirement. Also, many company-sponsored retirement programs have incorporated auto-enrollment and escalation design features into their 401(k) plans to promote savings.
But they are not enough for a new generation of workers that needs to maximize its defined contribution plans in order to securely retire. This is validated through annual Retirement Confidence Surveys conducted by the Employee Benefit Research Institute and frequently published surveys, research papers and benchmarking studies on retirement readiness and benefit adequacy.
Retirement readiness is primarily in the hands of the individual, so we need a way to break down the barriers and get people to start saving responsibly for retirement. What we need is a fully-automated solution using a defined contribution savings program with periodic monitoring, and pre- and post-retirement features would provide individuals with a ready-made financial wellness plan that will better prepare them for retirement.
A savings program that enrolls employees, sets a retirement target and contribution strategy based on pay, age and retirement savings to date, reviews outcomes, adjusts contributions as needed, and ultimately sends retirees a “paycheck” to improve the odds that employees will live out their retirement without running out of money. The periodic reviews, automatic adjustments and monitoring will assure employees never veer too far off the path to retirement security by adjusting for unforeseen economic and real life events.
This will also allow employees to monitor their progress toward retirement goals throughout their career without the burden, stress, or responsibility for the type of retirement plan management that is unrealistic to expect of employees with limited knowledge, time, and/or motivation to do the planning and execution.
The majority of Americans know what it takes to get their bodies in shape. Some are more motivated to do it and more educated as to the most efficient ways to reach their goals. Others need outside support via personal trainers, videos, books and clearly defined plans. It’s relatively easy to start the journey. When it comes to retirement readiness, the financial planning tools are available, but sometimes it’s tough to know what course to follow and how to get on track and stay on track. It’s important for employers to explore and evaluate the appropriate strategy that will put workers in the best position to enjoy robust financial health in retirement.
If you missed any of the 5-part series, you can access the series here, http://blog.buckconsultants.com/category/savings-insight.
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