Regardless of income level, 70% of employees indicated that saving money for retirement is their top financial concern, according to research from The Standard.
Other notable concerns include having enough money to pay for the following:
· Monthly expenses (57%).
· Medical expenses (52%).
· Support if a disability is incurred (52%).
· Mortgage/rent (49%).
“We found that saving for retirement outweighs other important priorities such as ensuring employees have enough money for a roof over their heads or medical expenses,” said Chris Dugan, director of retirement plan communications for The Standard. “Given its importance to employees, it’s crucial for advisors and employers to do what they can to help support their retirement readiness efforts.”
While saving money for retirement is a top financial concern, only 33% of employees are confident about their level of retirement readiness. As the new year quickly approaches, employers can make small but effective changes to their retirement plans to boost employees’ preparedness. Mr. Dugan has identified two key retirement considerations for advisors and employers planning their retirement plan approach for 2019.
First, employers can boost preparedness with automatic features. To help address retirement fears, plan features like automatic enrollment and automatic deferral rate increases can help improve retirement outcomes. The support for these features is high among employees, with 68% supporting automatic options according to research from The Standard. Generational groups also support these options, including:
· 70% of millennials.
· 66% of Gen Xers.
· 64% of baby boomers.
“Employers should also consider a managed account service such as the Qualified Default Investment Alternative, which offers annual automatic deferral rate increases that are customized to the needs of an individual,” Mr. Dugan said. “For most, this is just a 1 or 2 percent increase. But even a small additional increase each year can help make a specific retirement goal a reality.”
Second, employees want retirement planning advice. It’s easy to get overwhelmed when planning for retirement, which is why employees want guidance. The same research finds that about one half of employees say they aren’t comfortable selecting their own retirement plan options. Similarly, 55% of employees are interested in having a professional help them choose investments and manage their savings.
“Employees can benefit from using a managed service through their retirement plan, which is often very affordable, to help with investment decisions,” Mr. Dugan said. “Some managed services have a team of dedicated and licensed advisor representatives available that can serve as a resource for those who prefer to talk through their options. These services may lead to higher participation, engagement and overall levels of retirement readiness.”