According to the Merriam-Webster Dictionary, the word “meaningful” means “Having a meaning or purpose, full of meaning, significant.” It’s a concept that’s decidedly absent in much of the retirement benefit education employers provide their workers. Sure, they may cover all the bases, from how much a worker can contribute and how those contributions can be made to the basic options for investment of their funds and tax benefits of each. These facts are important. But they’re not as meaningful as engaging employees in a real conversation about their personal future.
If you’d like to make retirement benefit education at your organization more meaningful—and therefor impactful—consider the following suggestions.
Help Them Connect with Their Future Self
It’s easy to put off saving for retirement when you’re living purely in the present, consumed by your current wants and needs. Your workers may not be thinking about how the financial decisions they make today—from buying a $6 mocha latte to taking a European vacation—will impact their future. Fortunately, you have the opportunity to help them do so.
Ask your employees to imagine their retirement. What do they see? Are they traveling the country in a recreational vehicle? Are they living on the beach or in the mountains? Do they golf every day or spend time volunteering? How do they feel? Are they comfortable, happy and content? Do they worry about outliving their money? Once they make an emotional connection with their future self and what he/she will want and need, it will be easier for them to save for retirement.
Help Them Set an Achievable Savings Goal
Without a concrete savings goal, your employees cannot create a successful retirement plan. Unfortunately, most of them have no idea how much they will actually need. One 2013 survey found that 45 percent of savers believed they were not saving enough because they didn’t know how much money they would eventually need. Seventy-seven percent said they would save more if they knew how much today’s savings would be worth in future retirement dollars.
Instead of giving your employees a daunting goal to shoot for, help them find the answer to all those “how much?” questions. One way to do this is to choose a retirement plan vendor that offers online tools to allow your employees to model potential scenarios. They can then visualize how much they will need to save based on current rates to generate the future income they want.
Help Them Factor in Healthcare
Senior healthcare can take a big bite out of retirement savings. One 2013 study found out-of-pocket health-related expenses for a 65-year-old couple could be as much as $220,000 given average life expectancy. According to the study, most savers are only planning for $50,000 in healthcare expenses in retirement.
If you help your employees understand your employer sponsored healthcare plan as well as their future Medicaid and Medicare options, you will ensure they have a better picture of the benefits they will receive and the possible out-of-pocket medical expenses they’ll have to cover on their own. They can then incorporate this sum into their retirement savings goal.
If you’d like additional insight into meaningful retirement benefit education, contact your benefits advisor.