How creativity, flexibility can help employees achieve retirement goals
Looking for an innovative way to boost employee retirement savings and overall financial wellness? Employers can take a tip from the physical wellness arena and think wearables.
A Fitbit for retirement savings? It’s not out of the question, according to Sharon Scanlon, a senior vice president with Lincoln Financial. “If you can be physically fit, why not be fiscally fit,” she asked in a keynote address at the 2017 SPARK National Conference at National Harbor on Friday. “It’s not about wearables, it’s about the data.”
The goal of an “omni-channel approach” to participant education and motivation is to “meet them where they are,” according to Scanlon. In the case of using a wearable to deliver basic financial information, that could “meet” employees just about anywhere — at least physically.
But where employees are emotionally, in their learning style or life stage is another matter, hence the importance of the omni-channel approach.
“Do whatever works best,” Scanlon said. But don’t assume some variation on a high-tech approach is necessarily the most effective tactic, whether it involves a “wearable, or a more traditional computer-based system. “If you only offer technology, you’re will only get 40%” of participants motivated, she said.
And “technology” takes many forms; it’s not limited to modeling and projection tools. For example, traditional face-to-face counseling sessions aren’t always practical or even affordable on a large scale for many employers. That’s where systems like WebEx or even the most basic form of communication technology — the telephone — can play a role.
Another basic tool — printed material — can be “morphed” in the age of electronic communication. “We’re morphing the term ‘printed material’ to include sending PDF documents,” Scanlon said.
If you can’t measure it…
Essential to the “whatever works” philosophy is being able to assess what is actually working. “If you can’t measure it, don’t do it,” Scanlon advised.
Campaign results aren’t the only object of measurement that can drive success in employee retirement preparation efforts. Just as Fitbits can harness aggregated population health data to give employees useful benchmarks to assess their own progress, the same can be accomplished with financial data.
Some of the data driving Lincoln Financial’s approach to driving participant retirement savings was gained through the company’s 2017 “Retirement Power” participant survey, whose results Scanlon shared with SPARK conference attendees. Some 2,509 full-time workers between ages 21 and 70 participated in the online survey.
Following are five key findings from the survey shared by Scanlon:
· The stock market’s strong performance since the last two surveys (2012 and 2015) is correlated with greater employee optimism, confidence, retirement savings accumulations, and deferral “maxing out” rates.
· Participants are becoming more realistic in their assessment of the savings rate they need to maintain to meet their retirement goals (e.g. 67% believe they need to save at least 10%), yet continue to fall short of the mark.
· The chief impediments to adequate retirement savings rates cited include “can’t afford” (59%), “have more important financial goals” (38%) and “worry about lacking access to savings prior to retirement (17%).
· Participants seek more information on which investments to pick, how to manage investments as they age, and tax treatment of retirement savings.
· Auto-enrollment and auto-escalation features boost retirement savings rates.
Responding to these findings, Scanlon advised plan sponsors to help employees with goal-setting, leverage life event as a motivation to save, promote overall financial, and, as noted, “meet participants where they are.”