Ensuring Your Employees are Retirement Ready 

By Jim Trujillo

For many of us, retirement may seem like a distant dream with images of endless rounds of golf, days of lounging on the beach, or finally enjoying some long-lost hobbies. But making those dreams become reality comes with a lot of work.

Due to many different factors, including the global pandemic and much of the baby boomer generation nearing retirement age, we are seeing a huge portion of our workforce think about retirement more than ever before. According to the US Census Bureau, nearly 10,000 Americans will turn 65 every day until 2030. This is a great opportunity to help a large portion of the American workforce reach their retirement dreams but there are still major concerns with the ability to cross that finish line.

Over the last few years, market volatility and inflation have made employees uneasy about their retirement readiness. According to BlackRock’s 2022 Read on Retirement, 87% of employees, across all generations, reported they are concerned about inflation’s impact on their retirement. If so many employees are concerned about their retirement, what can employers do to help? 

FINANCIAL EDUCATION

Preparing to be financially stable in retirement doesn’t just happen – it takes years of planning and commitment. Many American workers are still living paycheck to paycheck, making the idea of saving for retirement seem like an unattainable goal. For many, the first step towards reaching financial stability is understanding where they currently are, and the gap between where they want to be. 

Recent trends indicate that workers are pushing their employers to offer more financial wellness support. In fact, 68% of employees polled in a recent Betterment study stated that they would prefer financial wellness benefits over an extra week of vacation. That’s insane! 

In turn, many companies are listening and establishing financial wellness programs for their employees. These programs can provide employees with a foundation of knowledge and address personal financial topics such as budgeting, debt-repayment, and saving for retirement. But taking this a step further and understanding exactly what near retirement employees are worried about can provide a more meaningful wellness program.  

For example, according to a recent VOYA survey (Ask Your Target Market online research platform between Jan. 18–26, 2021) 57% of workers over 55 don’t know how to estimate future healthcare costs. With medical costs being one of the largest expenses in retirement, it could easily reduce some major stress knowing what to expect and how to prepare. That same survey also showed that 86% of American’s want help understanding how to generate a stream of income in retirement. This stat is proving that employees know how to use a 401(k) to save but have no idea what happens with it once they hit retirement and instead of adding to it need to take from it. As HR professionals, our job is often times focused on how to help our employees now, but these employees closer to retirement are more focused on the next chapter of their life so we should see this as a great opportunity to pivot our education more towards what the future holds for them.

Additionally, companies have embraced a variety of tools to get this information to their employees. Some employers offer online financial guidance through articles or videos, while others provide a collection of services both online and in person, including workplace seminars or assistance by phone. Both solutions can provide employees access to information that can help them better understand their personal situation and help them reach their personal financial goals. 

MAKE A PLAN & WRITE IT DOWN

You may be familiar with the theory that you are more likely to achieve your personal goals if you write them down. In fact, according to Mark Murphy, CEO of Leadership IQ, vividly describing your goals with pen to paper makes you 1.2 to 1.4 times more likely to successfully accomplish them. Unfortunately, the majority of American workers are not taking this advice. 

Based on a survey from the Transamerica Center for Retirement Studies (TCRS), only 29% of workers have a written financial strategy for retirement.  But having a written plan in place isn’t the only challenge. Over the course of a lifetime, marriage, children, buying a new home, divorce, health challenges, job loss and endless other events that could derail a perfectly good retirement plan. 

One way to ensure your plan is on track is to conduct a periodic review. This assessment should include checking on your spending and saving, monitoring your investments’ performance and your personal risk tolerance, and making sure you are insured correctly in case of a financial emergency. Many employers are going a step further and enlisting the help of a licensed financial professional to provide employees with an unbiased second opinion on their overall financial plan.

GET IN TOUCH WITH YOUR EMOTIONS

You may be surprised to hear a financial advisor say that there’s more to retirement than just the numbers. Deciding when and how to retire can be one of the most important decisions we can make, and understanding the emotional aspects of this decision can make a huge impact on your nonworking years. 

One way to ensure an easy move into retirement is to have an open line of communication from the beginning. Retirement is a very personal situation and can mean a number of things for different individuals. Pondering how to find fulfilling ways to spend your time, where you want to be and who you want to be with in retirement can be emotionally draining. Many employers are taking this opportunity to have critical discussions with their employees so they can experience a smooth transition into retirement.  Some are even hiring coaches and mentors to help guide those conversations.

Additionally, companies are opening up lines of conversations with their employees sooner. This allows for a clear understanding of their employee’s retirement intentions ahead of time to help the company better prepare for the road ahead. 

While there are many facets to retirement planning, employers that plan for their workforce’s needs can take a confident next step in ensuring a smooth transition for their employees’ retirement.