How plan advisers can ease stress about retirement readiness

Smart plan advisers use an active, personalized approach to engage employees.

According to a recent retirement confidence study conducted by the Employee Benefit Research Institute, American workers are stressed about their inability to retire, but few are doing anything about it. For retirement plan advisers, this is an especially vexing problem – and, most likely, an urgent call to action. The employers and plan sponsors with whom you work should know that their employees have one burning, yet simple question when it comes to retirement: When can I retire, and will I be alright once I do? That nagging concern can significantly impact employee morale and productivity.

With retirement planning at a critically low point for a majority of Americans, responsible employers should focus on motivating their employees to take the necessary steps toward a successful retirement. Partnering with a plan adviser who brings the right tools to engage employees with a personalized plan is key.

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Smart plan advisers use an active, personalized approach to engage employees. Rather than telling them to visit a web portal, they bring personalized retirement education to each employee. They don’t start by talking about fees, asset classes or funds. Instead, these savvy plan advisers address what plan participants want to know: When can I retire, and will I be alright once I do? Plan advisers who provide a simple, one-page report to each employee to show their current contributions and how much they need to contribute to be on track for retirement, can motivate the recipients and, possibly, even put their minds at ease. The reports – and this is important – need to show employees exactly how the higher contributions affect their take-home pay.

Here are some additional tips for success:

1. Take small steps.

Sometimes the required increase in contributions can feel overwhelming to the employee. Instead, plan advisers need to show employees how making smaller annual increases in contributions will affect their paycheck and retirement balance. Employees will be relieved to see how taking baby steps each year can get them get closer to their retirement goals. Plan advisers need to illustrate the impact of waiting to increase the contribution amount with simple, personalized reports.

2. Answer additional questions.

Some employees have additional questions about outside assets, other sources of income or different life expectancies. Plan advisers should make themselves available for one-on-one planning sessions to address the issues employees are concerned about in private.

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3. Help employees plan for retirement.

Plan advisers need to provide employees with a one-page retirement needs analysis that’s simple enough to understand on its own, without an adviser’s explanation, although the plan adviser should be available to answer questions, of course.

The retirement needs analysis should provide the following details for each employee:

• How long their money will last in retirement;

• How much is needed to increase their contributions and how that increase will affect their take-home pay;

• And other options for having a successful, financially secure retirement.

When employees are worried about not being able to afford a larger contribution, plan advisers should provide an additional report, showing how they can take smaller steps towards a more successful retirement.

4. Track the success of the plan.

Finally, employers need to know whether their retirement plan is really serving their employees so that they, with the plan adviser’s help, can identify how to improve employee participation and retirement outcomes. Make sure to review participation and contributions by demographic groups to determine changes over time. Gather the information employers need to know with confidence whether the employees’ retirement readiness is improving.

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Helping people retire with confidence is a calling for many plan advisers. Specialty software programs and proven methodologies are available to help plan advisers be more efficient as business professionals and more effective in their roles as professional counselors and strategic motivators. When employees see how their actions today will positively impact their financial futures, they will worry less and be more productive on the job – and that’s something that every smart employer will like.

Edward Dressel is president of RetireReady Solutions.