If plan sponsors assume things can return to the pre-Covid normal, they risk exasperating existing problems. They’re there and cannot be ignored.
Plan Sponsors
The biggest issue when it comes to access is cost. It’s not just the plan sponsor’s sensitivity to higher costs. It’s the service provider’s ability to keep those costs low.
If you are responsible for 401k participant education or in any form of employee-based financial literacy program, you may want to adopt methods used by others who teach adults.
Aside from pep talks and infusing it into their corporate culture, don’t forget that much of what is needed can be built right into the plan.
All these strategies can be employed today and have proven themselves effective. It’s unclear that disclosing projected retirement income will provide the kind of incentive that will work.
It’s not as if this “surprisingly secret” formula has run its course. The equation is so timeless, so simple, that it continues to work for those who have the disciple to follow its rules. Still, can today’s workers see this work for them?
Perhaps the first option to focus on is that one that involves “paying back” or “not paying back.” The rules, while straightforward to financial professionals, may be less apparent to retirement savers.
If plan sponsors want to alleviate retirement angst among plan participants, they need to ensure they provide full transparency regarding factors that extend beyond the plan. Plan sponsors have an obligation to explain their retirement benefits within the context of these outside factors.
The good news is 401k plan sponsors don’t need to treat this as a solo act. They’ve already got a team of hired hands to help them.
Many see the quarantine as a test run for retirement. There are those who view this “test run” and say they never want to retire. How do you dissuade them of this notion that they’re practicing retirement right now?
