401(k) Participant Desires When Retirement Planning

Retirement plan participants are typically told to focus on saving as much as they can.  They are told to optimize their income and benefits like Medicare and Social Security in their post-career years.  But what is often overlooked are 401k participant desires.  This is sometimes referred to as the the “softer” side of retirement planning.  In other words, what 401(k) participants truly want when they no longer report to a job five days a week.

Amy Ouellette, Senior Vice President of Retirement Services at digital 401(k) recordkeeper Vestwell, recently penned a column for Employee Benefit News on this very topic.  She wrote, “If the idea of retirement is solely about escaping a job, we’re setting people up for disappointment.  Images of travel, golf, gardening and sailing fill retirement dreams, but is this enough to generate satisfaction, or will the luster start to dull?  Instead, there are other, equally important factors to consider when planning for retirement.”

Ms. Ouellette pointed out that work gives people a sense of identity and purpose, but then what do they become in retirement? She offered a reminder that it is just as important to be intentional about one’s identity once retired to avoid a loss of sense of self and purpose.  Many people, for example, often embark on a “second act”, which allows them to pursue a passion or alternate career path they didn’t have time or motivation for during their prime career years.

401(k) participant desires can include maintaining social connections in retirement.  At work, employees have a ready-made network of co-workers, clients, and friends.  In retirement, social connections may be more challenging to cultivate and keep.  This, especially in times like the pandemic years!  Many older people were isolated due to the Covid-19 pandemic.  According to Ms. Ouellette, it’s vital for retirees to be intentional about building friendships and relationships, particularly as they age.  “Mental and physical wellbeing are linked to a number of factors.  One, which is financial security.  Social connection is found to be of much greater importance to longevity, esteem and health,” she wrote.

Conversations around caring for aging parents as this generation ages are also critical.  401(k) participant desires also include long-term care and other retirement healthcare concerns.  These can often be overlooked.  However, they are a vital part of retirement planning – not just from a financial standpoint, but from a quality of life perspective.  Questions need to be considered, such as what level of care is required, how will it be funded, and does it require moving out of a family home?

Ms. Oullette also noted that it’s important for people to determine what, for them, constitutes a fulfilling retirement: “What does work or caring for your children mean to you?  Are there other areas of your life – hobbies, volunteering – that give you a sense of satisfaction?  What might you be interested in learning more about?”  The second career option may also be appealing.  As Ms. Oullette pointed out, Colonel Sanders of Kentucky Fried Chicken fame didn’t start the franchise until he was in his 60s.  In addition, for those with aging parents, she suggested having a trusted third party, such as a financial planner, present to coach families through necessary, and often difficult, conversations.

To be sure, retirement readiness looks different for everyone.  However, the focus is so often on accumulating enough assets for retirement.  At times, the actual meaning of what workers are saving for can fall by the wayside.  Encouraging workers to think about and having these meaningful conversations now may help solidify for them what it means for retire.  Always remain cognizant of what 401(k) participants are truly working toward.  This can help them focus on their financial needs, as well as bring clarity to what a fulfilling retirement means to them.

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