Pension and benefits administrators are needed more than ever to both guide and direct their employees towards healthy retirement savings and lifestyles.
The Voya Financial Retire Ready Index, which measures the retirement readiness of Americas either working or recently retired, suggests 74 percent of Americans have never calculated their monthly retirement needs.
Also, 51 percent of retirees have never tried to determine if their current savings will be enough to last through retirement though 39 percent assume what they have will not last 20 years grim statistics indeed.
But according to James Nichols, head of Retirement Income and Advice Strategy for Voya Financial, these numbers should be considered not just in the negative, but in the positive as well. We like to think about those as the greatest opportunity areas, he says. We spend a lot of time communicating and educating, and there is definitely room for improvement, he explains, in areas of financial literacy and planning. Turning that knowledge into action, adds Nichols, is one of the biggest areas the industry can help people secure their retirements.
For employers and benefits advisors there are relatively straightforward actions that can be taken to help employees. Nichols points to the statistics mentioned earlier and says helping employees calculate how much income is needed for retirement and how much people are on track to have, is a relatively simple but affective way to make people more aware of their savings needs. Its a pretty basic concept and I would consider that a planning activity but a lot of people, surprisingly, have not taken that step.
According to the index, adds Nichols, 75 percent of the higher scoring role model workers had figured out their income needs but only five percent of the lower scoring people had done so.
Making those changes in behaviour is not always so simple either from the industry side or the employer side.
Nichols says the best method is to make the planning process as effortless and seamless as possible. One method is to change the way people interact with their plans on the web. For example, rather than just providing a total asset number that may look like a large sum of cash with no substance behind it, employers should offer their employees the ability to see how much income they may need in retirement versus how much they are on track to have given their current savings and income rates. By doing this you are going through a planning process, you are learning. Its seamless and effortless, adds Nichols.
Overall, adds Nichols, employers should be talking with their retirement providers, and asking the right questions to know if those providers are equipped to provide the approaches best utilized by employees. The outcome is the income, he adds and by making retirement planning compelling, relatively easy, and by putting it into context of a future goal will employers to encourage a sense of urgency as well as improve the engagement that makes those retirement goals a reality.
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