Like the capper to a classic Western, employers and employees want to see an ending in which careers reach a thrilling conclusion and workers ride off into the sunset. Too often, though, the credits start to roll and employees suddenly realize they don’t have a horse, don’t know their destination and are starting their ride at two in the morning. The sun has already set on their ideal retirement.
When it comes to retirement, as with a vintage film, the groundwork is laid long before the final, climactic scene. With timely, targeted education, plans can help members prepare for a smooth ride toward their own career finale.
- A word of advice: Provide education, not advice. “If a plan is providing education, the responsibility is on the members to act on it. If a plan provides advice, it is starting to take responsibility for members’ retirement. That attracts a different type of liability,” says Tyler Smith of Benchmark Decisions Ltd. in Winnipeg, Manitoba. Smith presented “Retirement: Are your Members Ready?” at the 49th Annual Canadian Employee Benefits Conference. (Hear more from Tyler in his Benefit Bits Video below.)
- Folks, not facts. Numbers don’t lie. But the truth is, they also don’t stick with people the way stories do. Distributing testimonials from older colleagues who wish they had started saving earlier can have a positive impact on getting younger workers to start saving for retirement. For all ages, it’s also important to communicate early, often and with variety, including through personalized messaging. Repetition is your friend. We’ll say it again: Repetition is your friend.
- Have a seat. According to a CIBC poll, nearly half of Canadians lack a financial plan. Employers can help by holding basic education sessions introducing workers to the ol’ three-legged stool, that comfy, well-worn analogy explaining the importance of having multiple income streams in retirement. Three legs—a pension plan, government benefits and personal savings—make for a better perch in retirement. For members reliant on just one of those legs, it’s more like a pogo stick, a haphazard ride that can leave them scrambling for stability—and distracted from their late-career work.
- What a shock! According to Financial Education for Today’s Workforce: 2016 Survey Results from the International Foundation, one-third of respondents say their average active participant at normal retirement age is only a little bit or not at all prepared for retirement. One source of concern is financial shocks, which include large, unexpected expenses related to home, auto or medical bills. Hold a workplace lunch ’n’ learn introducing this concept. Members may not know when, but realizing financial surprises likely will happen can help them better prepare to absorb these shocks.
- Prescribe education on health care and drug costs. Canadian respondents in the CIBC poll listed increased health care costs as the top concern in retirement. Smith, who participated in a Q&A on retirement preparation for Plans & Trusts, stressed the importance of educating members on supplementing gaps in coverage. Send members a list of reputable sources where they can find information on health coverage in retirement, including government coverage, drug coverage and postretirement health plan coverage, if any. “Knowing where you may need to get additional insurance or health care coverage to offset some of those costs becomes important,” Smith said.
- Make the connection. A Society of Actuaries report showed that 53% of retirees miss having a regular paycheck. What’s surprising is what retirees said they missed even more (at 72%): relationships with co-workers. Retirement is about more than finances, and plans can make members aware of the importance of social connections once they leave the office. Allowing employees to participate in off-site volunteer opportunities is one way to shed light on finding social fulfillment in retirement.
It’s a winning scene when workers retire on time and on their terms—Businesses enjoy (less-stressed) (more financially confident) workers, and employees maximize personal choice and financial security.
But International Foundation research shows just 31% of organizations that offer retirement education deliver information on postretirement financial planning, and only 24% address the phases of retirement. This represents a real opportunity to step in, offer targeted education and help set the stage for that grand exit toward retirement freedom.
Retirement education is like the new sheriff in town. Its mere presence is a good beginning—a good beginning toward a great ending.
Editor, Publications for the International Foundation