Rethinking Retirement Plans in the Workplace

My professional career has been dedicated to helping employees get to and through retirement. Yet at a time when we are competing to retain and recruit key talent, I am wondering if the traditional view of retirement plans has become outdated.

Don’t get me wrong, particularly in a world where private sector pension plans are hard to come by, it is in the best interest of this country and its workers to save for a time when they no longer receive a paycheck. But it doesn’t matter what I think, it matters what our employees’ think. And here’s what they are saying – 84% of workers say that the idea of “financial independence” resonates more than the traditional concept of retirement¹. So maybe, just maybe, the commercials of a 65 year old retired couple playing golf or frolicking on the beach is not the image that will get today’s workers to act.

Ideally the core tenets of financial health (saving early, living within your means, managing debt and investing wisely) would be taught long before the first paycheck was ever received. However, according to Standard & Poor’s Global Financial Literacy Survey, less than 60% of Americans are considered financially literate, let alone an expert.²

Instead of waving the retirement carrot, employers and their vendors need to flip the narrative and meet employees where they are by getting back to basics. Coupling competitive financial benefits with financial literacy fundamentals helps employees make progress towards financial independence.

This sounds like a lofty, perhaps even a far-fetched goal. However with nearly 2/3 of employees re-assessing what they get from their employer, every little bit counts.¹

Making sound financial decisions can feel overwhelming. Challenge your organization to help your employees make their “next right decision” on a path of financial progress.

Here are four action steps to consider:

1. Over the last few years, technological advancements have allowed for personalized support, messaging and even advice. Meet annually with vendors to learn about what tools and resources you can leverage and promote with employees.
2. Speak to benefits holistically – during open enrollment, remind employees about employer sponsored savings plans (formerly known as retirement plans). Consider adding a “financial checkup” to your health assessment required to receive a financial incentive.
3. Review plan design to promote positive behaviors – incentivized employer match, automatic enrollment, and immediate plan entry may be low hanging fruit. Ask your service providers for suggestions on how to optimize your plan – this is not something you need to do by yourself.
4. Lack of emergency savings and debt management are two of the most significant impediments to long term financial success. Identify tools and resources to help your employees tackle these hurdles.

I’ll leave you with an inspiring Chinese proverb, one that applies both to employers and employees:

“The best time to plant a tree was 10 years ago, the next best time is today!”

¹ Voice of the American Worker Survey 2021

² Global Financial Literary Excellence Center (gflec.org/initiatives/sp-global-finlit-survey)

The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Kristen Koluch and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice.