What If “Early Retirement” Was Called “Reduced Retirement”?

I hope everyone had a great National Employee Benefits Day!

On Benefits Day, the International Foundation hosted a free webcast, Small Tweaks, Big Impact: The Power of Behavioral Decision Making for the Plan Sponsor, presented by Steve Vernon, a research scholar with the Stanford Center on Longevity. The webcast provided advice to help plan sponsors look at their benefits and communication initiatives with fresh eyes.

What If “Early Retirement” Was Called “Reduced Retirement”?

Here are five quick tips from the webcast to use the theories of behavioral decision making to nudge your participants toward saving more for retirement:

  1. Consider the Power of Your Words

Our standard benefits lingo includes terms like normal retirement ageearly retirement and late retirement. These words mean something very different to those outside of the benefits office. Early has very positive connotations, normal equates to what you should do and late has negative implications. But what if we reframed these. Instead of using early retirement, which implies a win (who doesn’t want to retire early?), what if we used reduced retirement which implies a loss? And instead of late retirement which implies a penalty or a failure, we used increased retirement which implies a gain?

  1. Help Your Participants Remember Who They Are Saving For

People tend to think of their future self as essentially someone they don’t know. How many times have you put off exercising or starting that diet until tomorrow? We value our “present selves” much more than that stranger “future self.” Help your participants realize their future self is not a stranger by using apps such as AgingBooth that show what they’ll look like when they are older. Techniques like this can remind employees that the future is coming, and they need to make decisions now that will help them tomorrow.

[Related: Ten Ways Behavioral Finance Can Boost Retirement Security]

  1. Reframe How Participants Choose When to Retire
Learn more about varying messages in your retirement communication in this Benefit Bits video.

If your employees are trying to decide when to retire, they may be weighing their options as “continue working” (boo!) vs. “freedom to do whatever I want” (yeah!) and seeing the obvious winner as retiring now. Try to help them see the more accurate picture—that working even a few years longer will provide a significant increase in their retirement savings. Reframe their options to see it as “Living comfortably with financial freedom” vs. “Scraping by on half of my paycheck.”

  1. Have Previous Retirees Share Their Story

If you’re hosting a retirement workshop, have previous retirees come in to share their successes and regrets. Stories from real people can be more powerful than even the most eye-popping statistics. When employees hear directly from their colleagues, it has much more impact than any declaration from the HR office.

  1. Remember the Marshmallow Test

If you’ve taken any psychology classes, you’re probably familiar with the marshmallow test—a study where young children were left alone with a marshmallow and told they could eat one marshmallow now OR wait 15 minutes and have two marshmallows. Most of the children had good intentions . . . but about half couldn’t wait and chose the yummy marshmallow right away. As adults we might think this is a symptom of childhood that we outgrow—but the facts say otherwise. We tend to take immediate gratification over delayed gratification, even if the delayed gratification would be in our best interest. Know that this bias to live for the present exists, and try to design and communicate your benefit programs for the irrational people that we all are.

Want to learn more? View the on-demand webcast: Small Tweaks, Big Impact: The Power of Behavioral Decision Making for the Plan Sponsor.

Brenda Hofmann
Communications Manager at the International Foundation





Senior Communications Associate at the International Foundation

Favorite Foundation service/product: Today’s Headlines Benefits-related topics that grab her attention: Wellness, work/life balance, retirement security, parental leave policies and unique and trending perks.​ Favorite Foundation event: The day we wait all year for–National Employee Benefits Day! Personal Insight: Brenda goes with the flow and this approach to life puts everyone around her at ease. Brenda enjoys the mix of roles she plays from public relations pro to new mom and wife.

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