DIY tools can help employees manage retirement.
By Jeff Miller
In the past, we’ve noted that a pessimistic economic outlook among 401(k) participants leads them to ignore and often retreat from retirement planning as they concentrate on more immediate needs—such as getting their bills paid and paring down debt.
But as the tough economy that once traumatized workers has become something of a “new normal,” we’re seeing something else: Employees seem more motivated to make positive changes and take on more personal responsibility for their future financial security. The even better news is that the outsourcing industry is ahead of the curve, with dynamic innovations and tools to continuously improve employees’ chances of a successful retirement.
This positive trend is underscored by the most recent findings of our annual Mercer Workplace Survey, a national cross-section of 1,507 401(k) participants. The 2011 survey (we’ll have results for 2012 in the fall) showed that workers were indeed taking charge of their futures more aggressively than ever. Their anticipated contributions for the year increased from an average of approximately $6,400 in 2010 to approximately $7,400 in 2011. For those under age 50, the survey showed an increase in the share of workers contributing at or above the tax-deferred maximum from eight percent in 2010 to 12 percent in 2011.
But perhaps more important is a general increase in confidence attached to almost every dimension of retirement planning. Up most conspicuously is confidence in “knowing how to calculate how much money you will need in retirement,” showing an increase of nine points from the previous year’s survey, to 67 percent. There was also more confidence about having enough money for retirement and in being able to cover healthcare expenses in retirement (and we’ll be measuring how employee attitudes evolve on that count, now that the Supreme Court’s ruling has further cleared the way for the implementation of healthcare reform in the United States).
But confidence isn’t necessarily competence, and the most important thing for today’s more motivated, more retirement-focused employees is having access to the best tools available for achieving goals. For those of us in the benefits outsourcing space, the opportunity has never been greater, and the challenge is to provide our corporate clients and their employees with much more than the administrative platforms and support they rely on. The call is for innovation, for active outreach, for tomorrow’s tools today—so that employees can build upon their confidence with empowering, do-it-yourself (DIY) technology.
Outsourcers must answer that call for DIY empowerment with nothing less than state-of-the-art offerings, such as online retirement planning tools and educational campaigns for employees whose 401(k) plans they administer.
How does this DIY solution look in practice? As with any employee-directed, online solution, the launch process requires a robust self-assessment tool that provides personalized feedback and a recommended action plan for any retirement scenario. Does the assessment reveal the need, in younger employees, for aggressive long-term investment, or for less risky investment choices in employees nearing retirement, or for a better mix of both for those in between?
The retirement workshop concept delivers hands-on projects that address common retirement planning challenges such as these, challenging participants to solve them by establishing specific goals and taking reparative and constructive action. Assistance comes from a toolbox of helpful calculators, worksheets and widgets, along with the opportunity to learn from retirement experts by watching videos, listening to podcasts, and consulting relevant online articles.
But the workshop approach can’t take place in a vacuum; ideally, participants should be able to interact with peers through discussion boards, quick polls, as well as share their workshop experiences through the various social media websites that have become part of daily life for so many of us in the working world.
At a time of so much change and challenge—for those of us in the benefits outsourcing community no less than for the employers and employees who rely on the quality of our service technology—none of us can afford to miss today’s opportunities. Clearly, we’re facing a more motivated workforce ready to embrace a higher standard of personal responsibility, and ready to interact with the innovations we’re delivering. When employees are given a hands-on chance to take charge of their retirement prospects and build secure futures, we all win.
Jeff Miller is president and group executive of Mercer’s outsourcing business.