How to Make Retirement Planning Unavoidable
Wednesday, December 19, 2012
Posted by: Susan Dyer
By Rob Peters, CUNA
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
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
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
Being under-educated and unmotivated to save
adequately for retirement would place your employees squarely in the middle of a
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
help employees get started on a retirement plan and stay on track, try these
four steps in partnership with your retirement plan sponsor:
- 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.
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.
- 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.
- 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