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A Publication of WTVP

As with all major life events, retirement—and the financial planning that precedes it—can trigger an avalanche of emotions and expectations. The blend of optimism, anticipation, and uncertainty that comes with preparing for “life after work” directly influences how employees approach retirement planning and colors how they perceive their employer’s retirement plan.

Companies can address these issues head-on and maximize the value employees place on the benefit by developing a comprehensive employee communication and education strategy. By promoting the importance of retirement planning and providing customized information and resources, an employer can showcase its retirement program as a competitive advantage and recruitment tool.

A Call to Action
Many Americans clearly need to save sooner and save more for their retirement years. A May 2005 survey from the Spectrem Group showed employees’ attitudes about retirement planning have changed sharply. According to the report, 31 percent of 401(k) plan participants believe they aren’t saving enough for retirement, which is nearly three times the percentage of those who responded the same way in a 2000 survey. Despite that concern, 63 percent of plan participants say they’ll have enough to live comfortably in retirement. These responses indicate how conflicted employees are about what to expect from their retirement savings.

Similar findings from the 2005 Retirement Confidence Survey, conducted annually by the Employee Benefit Research Institute, show that not only are employees behind on their own schedule for retirement savings, but they lack a clear understanding of how much they’ll need. The survey showed 42 percent had attempted to calculate what amount of savings they require for retirement. However, while 35 percent said they asked a financial advisor for help, another 37 percent estimated the amount on their own, and 10 percent guessed at what their savings should be.

Creating a Communication Strategy
Regular communication, delivered both in person and through multimedia educational materials, can strengthen employees’ retirement planning skills while building loyalty to their employer. Because retirement planning is unique for each individual, employees typically want opportunities to ask questions one on one and to conduct their own research independently, using convenient resources they can share easily with family members or financial advisors. When developing your approach to retirement communication and education, consider these key questions:

• How well do employees know your company? Especially if you’ve recently added new employees, whether through organic growth or acquisition, it’s essential employees understand your retirement program within the context of your company’s mission, vision, and values. Be sure to illustrate the “big picture” of your employee compensation and benefits program, and explain how it ties to your company’s strength, success, and business strategy.

• What are the demographics of your workforce? Employees in their 20s and 30s view retirement differently than those in their 40s and 50s. The resources you provide should respond to each phase of life and help employees plan for retirement in the short, medium, and long term.

• Does your organization have retirement “hot buttons”? If you’ve recently adjusted your retirement plans or if performance has changed substantially, address those issues before launching an educational program. Anticipating and responding to likely concerns reinforces your credibility with employees and clears the way for a meaningful discussion about their retirement planning needs.

• How do employees access information? To be most effective, employee materials should be tailored to their work environment. Is yours a highly wired company with PCs on every desk, or do workers have limited access to online tools? Can employees learn about retirement details during work hours, or do they need quick-hitting resources they can scan during a 15-minute break or at home? Employees will value tools most that are easy to access and that won’t interfere with their work responsibilities. Varying needs among employees may require a multifaceted communications approach.

While the particular dynamics of your workforce will define which communication tools best support your retirement planning program, some best practices apply across all organizations:

• Don’t limit communication to annual enrollment or election periods. Make retirement planning a topic throughout the year with ongoing retirement-related news and information. Sponsor lunchtime speakers and offer hands-on learning opportunities such as traditional or online courses.

• Begin at the beginning. Don’t assume employees already understand financial markets and investment choices. Start by covering the basics of why it’s important to save and how savings vehicles operate. Put glossaries and other resources at your employees’ fingertips so they can cross-reference materials or look up new or unfamiliar terms.

• Show employees what retirement really means for them. Put your retirement program in real-world terms by distributing individualized updates that show each employee’s savings rate and the long-term impact of saving earlier or increasing his or her contributions. Also, be sure your employees know how to contact agencies such as the Social Security Administration or Medicare to learn how federal programs may supplement their retirement savings.

A Cultural Shift
In her introduction to New Kid on the Block: Financial Planning as an Employee Benefit, Melody Carlsen explains how recent world events have made planning for the future especially relevant and highly personal. “The notion of putting things off, whatever they are and for whatever reason, has become unsettling as opposed to convenient,” Carlsen writes. “Financial planning, wherever it fits in the bigger scheme of things, is no exception. Already in its stride prior to September 11th, financial planning as an employee benefit is moving rapidly forward. The need for financial planning, the interest in financial planning, and the opportunities to institute and advance it are ripe.”

While emotional triggers can raise employees’ awareness, their interest stops if they don’t know how to access the information for creating a solid retirement plan.

An Empowering Investment
Through education and communications that empower employees to plan for their own retirement, employers can fulfill their fiduciary responsibility while strengthening employee commitment and confidence. That long-term investment can pay off for your company and for your employees through all phases of their personal and professional lives. IBI

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