PORTLAND, Ore. — Oct. 11, 2018 — Regardless of their income level, 70 percent 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:
- Monthly expenses (57 percent)
- Medical expenses (52 percent)
- Support if a disability is incurred (52 percent)
- Mortgage/rent (49 percent)
“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 percent 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. Dugan has identified two key retirement considerations for advisors and employers planning their retirement plan approach for 2019.
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 percent supporting automatic options, according to the research from The Standard. Generational groups support these options, including:
- Seventy percent of millennials
- Sixty-six percent of Gen Xers
- Sixty-four percent of baby boomers
“Employers should also consider a managed account service as the Qualified Default Investment Alternative, which offers annual automatic deferral rate increases that are customized to the needs of the individual,” Dugan said. “For most, this is just a 1 or 2 percent increase. But even a small additional increase each year can make the difference in making a specific retirement goal a reality.”
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 half of employees say that they aren’t comfortable determining their own retirement plan options. Similarly, 55 percent 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,” 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.”