How a prep school readied its staff for retirement

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The stock market crash in 2008 prompted Gilman School, a private preparatory school for boys in Baltimore, to reevaluate its retirement plan offerings and look for better ways to engage and educate teachers and staff about their finances and retirement readiness.

“The country has a retirement issue. The average net worth of the country has been going down the last 15 years and, obviously, there are concerns about Social Security and having to work longer,” says Sean Furlong, director of finance and operations at Gilman School. “I think our country overall has a retirement planning issue.”

Gilman’s teachers are “wonderful” and “work very hard,” he says. The school hopes that all of its employees will have a nice retirement and be able to appreciate it and live the way they want to.

“What we found is that teachers, as well as a lot of the country, are not prepared for retirement and thinking about retirement and the financial aspects of retirement,” Furlong says. “They are teachers first and they look at finances if rarely and they do not understand the financial terms and language involved.”

When Furlong first started looking at its benefits offerings it realized that it already offered a more than adequate retirement plan. If an employee contributes 7%, they would receive up to an 8% match. Despite this favorable matching plan, Gilman couldn’t get 100% of its staff to participate in the school’s 403(b) retirement plan.

Gilman’s first goal was to fix the bugs in its 403(b) plan and move its employees into the right types of investments. The retirement planners also made a move to educate employees about their personal finances: how to plan a wedding, save for college or make a budget, Furlong says.

The school’s previous retirement plan offered employees too many choices, according to Furling. The plan was loaded with 70 to 80 options to choose from without educating participants about the individual options. So five years ago, Gilman revamped its plan. It removed poor performing funds and added in target-date options. They were a hit.

“Eighty-four to eighty-five percent of employees are in target-date funds now, which is terrific,” says Furlong. “That would not have been the case four or five years ago.”

Gilman also requires its employees to participate in the plan. School staffers must put in 5% of their funds into the 403(b) plan and in return they receive a 6% employer match. If employees put in an additional 2%, they will receive an additional 2% match from their employer.

“That is optional,” Furlong says. “We’re up to 21% overall that employees are putting in, including the company match.”

Before signing up school staff for the new plan, Gilman educated its staff about the tax advantages of saving toward retirement and paying their future self, first. The school’s retirement plan team also tries to keep retirement planning in employees’ minds by sending out Money magazine articles.

“Part of this is if you only look once a year, you forget about it. If you are continually reminded, given an article on target-date funds or thoughts on a healthy retirement … [they become] part of their knowledge and understanding,” Furlong adds.

Gilman’s employees appreciate how generous the retirement plan benefit is and they are welcoming both the education and the push to save, according to Furlong.

The school also offers one-on-ones with financial planners and financial presentations either during teacher planning days or via webinar. It gave every employee a copy of the book “90 Day Money Challenge” by Brian Hamilton, who worked with Gilman’s retirement plan provider PSA Insurance & Financial Services, Inc. before it was bought out by United Capital Financial Partners Company’s national retirement program consulting firm The PFE Group.

As in, Gilman also looked outside for help in upgrading its retirement plan. Furlong read about financial education firm Financial Finesse and its financial wellness program in the Wall Street Journal. It hired the company last August to implement the program at Gilman.

“[Gilman is] very forward thinking in the sense that they have been providing some aspects of financial wellness for staff and teachers over the last few years and noticed less and less people showing up to workshops,” says Daniel Starobin, director of client programs at Financial Finesse.

As Financial Finesse learned about Gilman’s goals, they became interested in Financial Finesse’s online financial learning center, which includes an online financial wellness assessment. Some teachers and staff at Gilman prefer to work on their own and go through it at their own pace, Starobin says. Others want to listen to webcasts or have one-on-ones with a financial planner Financial Finesse’s methodology has a better response rate from employees than a traditional workplace workshop led by a plan administrator, he says.

In February, Gilman’s teachers and staff were given a 30-day window to go online and complete the financial wellness assessment within the financial learning center.

“We hosted three webcasts and gave a quick demo of the learning center, geared toward teachers, to get them excited about it. They offered free one-on-one sessions through us for 16 people,” Starobin says. If employees completed the survey they were entered into a drawing for the free one-on-one sessions. Gilman also offered local gift cards as an incentive for employees to take the assessment.

Of Gilman’s 240 employees, 135 of them took the survey.

“We got a good sampling of data. What came out strongly is the desire for one-on-one interaction. Not a webcast or over the phone. In person,” Starobin says. Financial Finesse will continue to send employees financial tips over the summer and send email reminders to visit the financial learning center. In September, when school is back in session, Financial Finesse will schedule meetings during in-service days throughout the year.

“Gilman places this high on the list of priorities. They are very good about dedicating time to us where we can come in,” Starobin says.

Retirement isn’t the only focus at Gilman School. Its benefits team has also started dabbling with the idea of student loan repayment and child care on campus. It also has a program that provides $5,000 toward the down payment on a first house.

Gilman started a health savings account program last year partnered with a high-deductible health plan. Twenty percent of its employees signed up for it in the first year, Furlong says.
“Usually 5 to 10% sign up in the first year. We were successful in getting people to think about it. It makes sense for people who don’t go see the doctor much or who are younger. They can set money aside for their future,” he adds.

The private school offers three health plans and will pay 60-90% of the individual health plans, depending on which one the employee chooses. It offers life insurance and will pay an average of 60% of the cost for faculty to send their children to a K-12 private school, either Gilman or another institution.

Good benefits are important to Gilman’s management because “we’re in a tough stage. We’re in a low inflation period, which also means low raises,” says Furlong.

“We’re dealing with a population that doesn’t get bonuses generally and dealing with a population that is considered underpaid relative to what they contribute to society, so it’s hard to get your budgets balanced and to save beyond retirement and keep your head above water,” he says.

“And we know that,” Furlong says.

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