Recently the Employee Benefit Research Institute released the 2023 “Retirement Confidence Survey Results” and the results are eye opening. Within the last 18 months we’ve seen some historically bad market volatility, including the worst year ever for the bond market in 2022, recent highs in inflation, and three of the biggest bank failures on record. Those headlines alone can be tough to stomach for employees, but the impact it’s had on retirement confidence is staggering. Here are some of the highlights of the survey results:

• 84% of workers are concerned that the increasing cost of living will make it harder for them to save.
• 40% of workers are NOT confident their money will be able to keep up with inflation (during retirement).
• 64% of workers are confident they have enough money to live comfortable during retirement (18% drop).
• 84% of workers are concerned that increased costs of living will make it harder to save for retirement.
• 75% of workers worry the stock market will be increasingly volatile and unpredictable.

As you can see, retirement is something top of mind for many employees and increasingly a cause for concern. With these results in mind, how do we help employees combat these fears and feel increasingly more confident that they’re on track and their savings can hold up. We see two possible solutions to the issues above and when combined we see a dramatic increase in retirement readiness/confidence.

The first solution is a robust education plan that includes both financial education seminars and opportunities for employees to meet one-on-one with an advisor to discuss their personal finances. With the above survey results in mind and considering the last three years of headlines and market volatility, we can see how employees may be cautious with or unsure about their retirement savings. This is where leveraging your advisor to provide education to employees is key. We often work with employees in either seminar or one-on-one settings and while these topics come up, we find the more we’re able to work with the team and both educate, but also build trusting relationships, the more the team feels confident about the path they’re heading down. Educating the employees on both what’s happening and different strategies for retirement saving is an excellent start. Especially in one-on-one settings, we can dive into their individual situation and help create an action plan to guide them to optimal retirement savings.

Another way to help alleviate some of these concerns is to look at your plan design and evaluate if it’s effective in encouraging your employees to participate in their own retirement success. In a previous article we discussed the pitfalls of keeping employees past their desired retirement date and how that can impact both productivity and the company’s balance sheet. We’ve also discussed the importance of plan design for attracting and retaining top talent. This is yet another reason why periodically evaluating your plan design to make sure it’s keeping up with the competition and encouraging employees to save is so vital. Many plan design changes can even offer increased contributions to company owners and executives as well as employees.

If your current service model doesn’t include evaluating plan design or a robust employee education package that includes enrollments, seminars, and one-on-one opportunities, you owe it to your team and company to reach out to us and discuss how that can be improved. We find that when our clients are addressing plan design and education on a regular basis, employees engage with the plan at a higher rate and elevate themselves both as employees and retirement savers.

Written by Matt Kruckenberg, Manager of Retirement Plan Services. Matt can be reached at 614-907-8639 or matt.kruckenberg@josephgroup.com