In last month’s article I reviewed ways that plan sponsors can engage with their employees, and I thought the perfect follow up this month would be to talk about and review the topic of retirement readiness.

See related: Increase retirement plan engagement

There is a good deal of talk today about retirement readiness in the benefits and retirement industries. With ongoing discussions on Capitol Hill regarding the future of Social Security and Medicare, retirement readiness has become a popular topic. Advisers have also started discussions with benefit planning committees and plan sponsors regarding the importance of getting employees retirement-ready and what they can do to make it happen. Plan changes are being made or being considered to help employees. In-plan retirement income strategies are being discussed and offered as plan sponsors cope with benefit adequacy. Employers are also starting to talk about in-plan advice as another way to help participants with their retirement options. All this is in an effort to help employees reduce the financial stress they encounter while working. So why is it important to have these discussions now about retirement readiness? 

First, studies have shown that employees are not saving enough to meet their retirement needs. Employees continue to believe that they can put off saving for retirement until tomorrow. This adds to their financial stress as they get older, and they realize they may have to keep working longer to be able to afford retirement. Secondly, this is compounded by the average employee living longer, and thus needing more money to maintain their standard of living in retirement.  If employees have not accumulated enough to retire, they are going to have to continue to work. This can potentially lead to unforeseen costs with other benefits plans like health insurance costs.

A recent Financial Finesse report on overall retirement preparedness has shown small improvements since 2011. However, the report also shows most participants have not taken the time to review the retirement income they will need to retire. The question is: Has the market improvement been leading to employees doing less to prepare, or are they really starting to take the time to plan?

In the end, it is better to discuss and focus participants on what it will take to be retirement ready by providing the employees with various tools and resources for them to use and make it happen.

John Ludwig, ChFC, AIF, CRPS, an LPL Financial Advisor with LHD Retirement, can be reached at

This information was developed as a general guide to educate plan sponsors, but is not intended as authoritative guidance or tax or legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation. In no way does advisor assure that by using the information provided plan sponsor will be in compliance with ERISA regulations.

Securities and Advisory services offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC.

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