Every day, 8,000 Baby Boomers celebrate their 65th birthday. However, only half of them are saving enough to cover at least the basic retirement expenses — housing, healthcare and food — to say nothing of discretionary items.
For plan sponsors aware of these statistics, it may seem perfectly reasonable to target communications to older employees in order to make sure they’re maximizing their participation in retirement planning. But tread carefully: if you push too hard, it can move over the line toward age discrimination and harassment.
It’s best to talk to the entire workforce as a whole. That said, there are some subtle ways to make sure your message gets across.
Look for entry points
While you already communicate with employees when plan enrollments come up, consider reaching out on other occasions that might be more personal, including birthdays and work anniversaries. For something less personal, use dates associated with financial planning like April 15th, the year’s end, and January resolutions. Another natural entry point for the discussion is National Save For Retirement Week which takes place in October each year.
Frame the issue
Provide rules of thumb so that employees can envision how their numbers match up. For instance:
- Retirees generally can live comfortably on 80 percent of their pre-retirement annual income.
- Experts usually suggest that you’ll want to have about 10 times your annual income in retirement savings.
Since people of all ages can be overly optimistic about how things are going to work out, it may make sense to keep some statistics in front of them.
For instance, think you’re saving enough for retirement? You’re probably not. Bankrate says two-thirds of American’s don’t save enough and LIMRA says 49% of Americans aren’t contributing to any retirement plan at all.
Or, explain to them that few people will inherit enough assets to retire on: An AARP study estimates that 80 percent of boomers will get nothing, and only about 1 in 15 would get as much as $100,000.
There are numerous calculators out there, from the simple to the complex (calculating inflation, Social Security benefits and more). Some of the easiest to use include those from:
Build on success
Any moves an employee makes towards saving for retirement should be celebrated. Plan sponsors should educate employees that moves such as reducing or paying off credit card debt, paying off a mortgage, are taking steps to reduce their current cost of living will all help them navigate retirement.
Encourage them to ask for help in planning for retirement. A study by IRI found that among Boomers who work with a financial advisor, 75 percent stated their advisor prepared a retirement plan. IRI also found that having a plan for retirement increases retirement confidence levels and that 45 percent of Boomers whose advisor prepared a retirement plan were extremely or very confident they will have enough money to live comfortably throughout retirement. That compares to 32 percent of Boomers whose advisor did not prepare a retirement plan.