April 18, 2018

in Investment & Retirement

Have the retirement conversation

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BY DIMITRI POLIAK, CONSULTANT, INVESTMENT & RETIREMENT

When was the last time you checked in with your employees about their retirement readiness? As a retirement plan sponsor, you’ve no doubt wondered about how well the benefits of your retirement plan are being communicated. And perhaps you’re more than a little concerned about what your plan may provide to your employees at retirement.

But have you actually heard from your employees? And that doesn’t mean sending out an annual survey. It means taking a deep dive into your employees’ specific retirement needs and matching those to their current savings through the plan you offer.

The bottom line is – you need to start a retirement conversation.

That means asking questions. Are your employees on track to have retirement savings that will deliver on their visions of retirement? Or are they years behind in savings, forcing them to stay on at work or face a retirement with inadequate income? Are they—and you—in for a big surprise when it comes time to cut the cake at the retirement party?

Maybe there won’t be a party at all.

60% of Canadians say they aren't saving enough for retirement and 67% of them are stressed over their financial situation according to Manulife Financial’s 2017 Financial Wellness Index, suggesting employees are not ready for retirement, despite your best efforts.

So how can an organization help their employees plan for retirement?

You need a communications strategy

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Given employees staying on in your organization past 65 could come with issues - a lack of staff turnover, fewer advancement possibilities for younger employees and potentially higher benefits costs due to increased drug costs and a higher number of STD or LTD claims - you need to develop a communications strategy that can help them focus on their retirement goals.

First, and most importantly, you need to analyze your employee population. Begin by gathering data on plan enrollment and participation. What are the ‘weak links’ in your organization—the employees who face retirement in a few years and clearly don’t have adequate savings – or those in their 30s and 40s who are behind but still have a chance to turn their savings strategies around?

Once you’ve determined which segment of your employee population is at highest risk, you need to signal the retirement alarm. Let them know that their savings strategy needs a rethink – and that you are committed to helping them determine the best course of action.

Begin a targeted approach by communicating with these employees.

Think big picture. First of all, it’s critical that they comprehend how valuable your retirement program is, and how it fits in with your firm’s mission, vision, and values. Explain to them how you’d like to help them meet their retirement goals.

Offer support. An advisor can help them craft a plan that works by identifying their visions of retirement and their unique financial challenges. They can also factor in life changes, such as marriage, divorce, the birth of children and serious illness—which can all impact savings.

Be age-specific. How old are the employees you’ve identified? If they’re in their 40s, they’ll need a longer-term view—and approach—than someone a few years away from retirement. The resources you offer your employees should reflect this.

Choose a multifaceted approach. Tailor your communications to the type of work environment in your organization, and to your employees’ needs. Do your employees prefer hard-copy communications or do they favour digital? Employees will value tools that are easy to access and easy to understand. They’ll also want access to information on their own time – not just at work.

Make it visual. Show your employees projections of what their retirement might look like at their current savings levels. Then present them with visuals that illustrate what extra savings could mean. Sometimes, a simple example of how long it would take to reach one's retirement goals can go a long way in achieving engagement.

Make retirement a topic that’s discussed all year. Sponsor lunchtime speakers and offer traditional or online courses and check in regularly to ensure they’re on track with the new path they’ve charted.

Opening a retirement dialogue with your employees can make the difference between an underfunded retirement – and a comfortable, stress-free one and help you deliver on your commitment to assist employees in saving for their retirement.