How to Make Retirement Planning Unavoidable

By Rob Peters, CUNA Mutual Group

Your organization offers its employees a retirement plan. You spend a fair amount for this benefit and use internal human resource staff to manage the plan. Every quarter, your management team reviews the retirement plan, and you’ve even paid an advisor to help make sure you’re offering an effective, complete menu of options. You’re proud of the plan, except for one thing: It isn’t working.

At least one in four employees choose not to participate, and most who do participate aren’t investing enough to achieve your plan’s main goal: guiding each employee to a financially secure retirement. What’s wrong?

Chances are, nothing’s wrong with the plan itself. But something is wrong with how your employees are educated and motivated to take responsibility for their own retirement security.

An Epidemic of Non-preparedness

Being under-educated and unmotivated to save adequately for retirement would place your employees squarely in the middle of a national epidemic.

The aggregate retirement income deficit for all Baby Boomers and Gen Xers—that is, the amount by which their savings, plus Social Security, falls short of the projected amount they’ll need to maintain their lifestyle after retiring—is $4.3 trillion, according to the Employee Benefit Research Institute. One reason is that, on average, employees contribute only 6.4% of their paychecks to a 401(k), according to Plan Sponsor Council of America research. Typically, financial advisers recommend 10% as a baseline minimum and 15% for those who start saving for retirement late (in their forties or even fifties).

Four Steps for Plan Sponsors

To help employees get started on a retirement plan and stay on track, try these four steps in partnership with your retirement plan sponsor:

1. A mandatory get-started program: When new employees are eligible to join a retirement plan, require them to complete a worksheet or software program that helps them determine specific goals, contribution amounts, and investment mixes. Set aside time just for this.
2. An annual employee review: As part of management’s annual employee review of personal development goals, include the employee’s progress on retirement savings goals.
3. Regular education: Insist on a provider that offers quality education focusing on how to implement an effective retirement savings plan. Hold regular, mandatory educational meetings.
4. Get employees up to tech speed: If your provider offers self-service planning software, schedule 15 minutes per year for your employees to use it, and be sure the provider offers personal service for anyone who has questions while using the software.

Following these steps makes retirement planning almost unavoidable for employees. This has become necessary, because for so many employees, committing to a retirement plan and following up regularly is like going to a dentist. They’d rather not.

But dentists put patients on a schedule of regular check-ups and cleaning because they know exactly what happens when folks wait to see a dentist until they get a tooth ache. Don’t wait for employees to be pro-active about their retirement. In the end, they’ll appreciate you for it.

Rob Peters is a Retirement Strategist for CUNA Mutual Group, which offers the RetireOnTarget® system. Contact Rob for more information.