Saving for retirement can feel abstract, especially when participants haven’t considered what their life after work might actually cost.
Following a recent TPSU program at Texas State University in San Marcos, Texas, Fred Barstein, founder and CEO of TPSU and 401kTV, spoke with Cynthia, a company president whose organization employs more than 250 people, about an approach her company used to make retirement planning more tangible.
During one of the company’s twice-yearly educational seminars, employees were asked to visualize their retirement first. Would they travel? What would their lifestyle look like? From there, they built a budget around that vision, including expenses they might otherwise overlook, such as healthcare.
The exercise helped turn retirement from a distant savings goal into something employees could actually picture and plan for. Cynthia said employees continued talking about some of the potential expenses they learned about afterward.
For plan sponsors, it’s a simple reminder that participant education doesn’t always have to start with investments or contribution rates. Sometimes helping employees picture the retirement they’re saving for can make the numbers feel much more relevant.
Read the Full Transcript Here:
Fred Barstein: Greetings. This is Fred Barstein, founder and CEO of TPSU and 401kTV. We just completed a program here in San Marcos, between Austin and San Antonio, at Texas State, and I’m here with Cynthia. Welcome, Cynthia.
Cynthia: Thank you.
Fred Barstein: Okay, I’m going to ask you a few questions.
Cynthia: Yes. Thank you.
Fred Barstein: Before we do, tell our audience a little bit about yourself, your role, and the size of your organization.
Cynthia: I’m the president of my company, and it’s just over 250 people.
Fred Barstein: Very good. So, one of the things you talked about, and we heard about in our “what’s working, what’s not working” discussion, is something you do around retirement budgeting. What is that?
Cynthia: We do educational seminars twice a year where we update employees on the market, but then also try to focus on different things to get people’s attention and get them engaged.
One time recently, we focused on budgeting. We did an exercise at the very beginning where everybody would try to really think about their retirement and visualize what it would look like and what they would be doing.
So, if they saw themselves traveling, they would make sure they put traveling in the budget. Then we went through budgeting items, including things like medical expenses.
Our advisor said you should plan on over $250,000 in retirement for medical expenses. So, if you think you have 25 years, that’s $10,000 a year.
We just tried to help them really think about a budget.
Fred Barstein: Yeah. And why did you do it?
Cynthia: As I said, we’re just trying to think of different ways to get people engaged and not gloss over what their real budget would be and how much they needed to save.
Fred Barstein: And what’s the effect been?
Cynthia: I think people appreciated it. I know people bring up that Medicare comment, or medical comment, and how much it’s going to cost and how they didn’t have that in their budget.
Fred Barstein: Yeah, that’s great.
Final question: What are a couple of things you learned today, and would you recommend TPSU to other plan sponsors?
Cynthia: Yes, I would. I’ve done it several times, along with a few of my colleagues.
I just think it’s important to stay up on what’s new and to brush up on things you might forget. You always go back with a list of things you want to double-check, like making sure all the beneficiaries have been put down by our participants and things like that.
So, it’s just good to keep everything top of mind.
Fred Barstein: Very good. Well, thank you for your time.
Cynthia: Thank you.
Fred Barstein: And thank you for watching 401kTV.
