To avoid stalling, retirement readiness initiatives need lift
NEW ORLEANS — Employers must do much more to help their employees prepare for retirement beyond offering a 401(k) plan.
For one, they can step up their game by providing employees with personalized retirement readiness scores, said Jerry Yen, vice president of strategic partnerships at GuidedChoice, during a panel on retirement readiness best practices, on Tuesday at the Benefits Forum & Expo.
What employees need to know is not what their 401(k) account balance is but rather “what it’s worth to them on a monthly income basis,” he said at the Employee Benefit Adviser and Employee Benefit News-sponsored conference.
Yen encouraged employers to provide employees with “specific assessments about what they need to do now to be able to retire” and to “get deep into the analytics” of their 401(k) plans to determine metrics, such as retirement income ratios, for each employee. These ratios help workers determine whether they can match their current living standards in retirement.
Armed with these metrics employees would then be able to make choices that will help them get on track, Yen said.
Employers would supply 401(k) plan data from their record-keepers to vendors to run personalized metrics for each employee.
HR professionals especially have an important role to play in advancing measures to ensure employee retirement readiness, according to Jackie Ward, chief human resource officer at Newport Group, an independent retirement and benefits provider.
When talking to senior management, HR professionals need to be “an advocate” for employees. They need to make sure retirement readiness is on the agenda and that it’s talked about “not just during open enrollment but throughout the year,” she said.
She noted that companies often think that once they’ve put a 401(k) in place, their efforts and responsibilities are over. An employee 401(k) plan, she said she reminds clients, is “just the icing on the cake.”
Ward echoed Yen’s views that data needs to be collected and presented in a way that is “real for people.” Employers, she said, need to take the time to talk employees through data modeling tools to show them how to use the information effectively.
Yen put it simply: “Employers need to boil it down to terms that are understandable for people today,” he said.