The HR director for a NYC based medical center discusses at a TPSU program held at Long Island University how she helps new employees visualize their retirement outcomes to help make better decisions as well as her high touch approach to participants during life events. Though technology and behavioral finance have done a lot to improve retirement outcomes, good old hand holding and a personal touch continue to have a high impact.
When new employees are hired, the HR director speaks to each of them asking them to visualize a time when they will no longer have a paycheck and asks them to think about how they are going to survive. Rather than focus on the mundane, she asks them to think about how they would be able to take vacations to Hawaii, for example, if they do not start putting money away now.
Getting younger people to thinking about their older selves is hard – that person is really a stranger. There is a tool used by MassMutual, for example, that shows a picture to people of what they might look like in 30 years. Deferral rates go up immediately. Also, young people do not relate to the concept of “retirement” but they do respond to financial independence or the ability to maintain their lifestyle when not working.
The HR professional at the NYC medical center also personally speaks to employees that call in especially when they are going through a big life event which might cause them to take out a loan. Instead, she consuls them on suspending contributions for a limited period especially if they are considering a hardship withdrawal which can cripple retirement savings.
People relate to people, especially those they know and trust. Generic messages from strangers in person or through video is better than written documents or emails but not as good as speaking or hearing from someone in the company or their advisor. Check out 401kTV Studios to find out how you can record 5 minute messages to employees about their plan with tips about how to save more for retirement.
