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Offering an Effective Retirement Plan Starts with Education on Tools and Resources

Offering an Effective Retirement Plan

Offering an Effective Retirement Plan Starts with Education on Tools and Resources

Offering an effective retirement plan means bridging the knowledge gap and teaching your employees how to make the most of this important benefit. In other words, as a recent article in CUNA Mutual’s CU Management magazine put it: “If you want to help your employees save enough to retire on time, help them understand how to more effectively use the retirement tools and resources you offer.”

Recently, we wrote about plan design as a key element of an effective retirement plan. It turns out, employee financial wellness education is another critical cornerstone of offering an effective retirement plan, according to a new CUNA survey cited in the article linked above. And employees not only need retirement education, they want it. What’s more, they’re interested in very specific topics, the survey found. CUNA asked respondents to rank their interest in seven finance and retirement planning topics (percentages represent the number of respondents who ranked the topic as their highest interest):

  • 25 percent: Understanding the tools and resources available
  • 24 percent: Budgeting and managing debt
  • 18 percent: Smart retirement saving practices
  • 13 percent: Preparing to transition to retirement
  • 12 percent: Basic investment principles
  • 6 percent: Advanced investment principles
  • 1 percent: Other

What’s more, the CUNA survey found, the need for financial wellness education spans age groups. Financial wellness requires employer support, and when thinking about offering an effective retirement plan, it can be beneficial for sponsors to understand specifically what kind of guidance employees need and want so they can tailor their programs accordingly. CUNA found that “understanding tools and resources available” was ranked the number one or two topic of interest by all three age groups surveyed: Millennials (18-34), mid-career (35-49), and older (50+). The bottom line, the survey results showed, is that beyond retirement planning, a key ingredient of offering an effective retirement plan is finding ways to serve employees’ interest in financial wellness education.

The Millennials CUNA surveyed earmarked “budgeting and managing debt” as their number one priority (35%), while “understanding tools and resources available” was number two (23%). This clearly reflects Millennials’ ongoing struggle to prioritize more near-term financial obligations, such as paying off student loan debt, with longer-term ones, like planning and saving for retirement. New benefits, such as student loan repayment programs, may provide employers with an opportunity to help address Millennials’ concerns and get them on track to begin saving for retirement sooner. As we’ve written before, meeting employees where they are can boost savings, readiness, and outcomes across the board, and contribute soundly to offering an effective retirement plan.

Mid-career employees listed the same two topics as equally important top priorities (26%). “Preparing to transition to retirement” was the number-one ranked topic for respondents 50 and older, while 26% chose “understanding tools and resources.” Again, each of these clearly dovetails with where these demographics are in their age and stage of life and provides employers clues on how to best serve the needs of a diverse workforce across generations.

Just as varied as their needs is employees’ preferences when it comes to how they choose to receive financial wellness education — another important element to consider as part of offering an effective retirement plan. How will you distribute critical financial wellness education? Here’s how employees ranked their preferred retirement education methods, from the CUNA survey (ranked highest to lowest according to preference — the lower the number, the higher respondents ranked the method):

  • 3: In-person training held at their office
  • 4: Short, topical videos they can watch online when it’s convenient
  • 4: Self-guided learning modules that allow me to go as deep on a topic as I like
  • 6 Virtual training meetings I can join on my computer
  • 6 One-on-one discussions (in person or via phone)
  • 7: Personalized email messages

The survey revealed a few surprising findings that serve as a good reminder for employers focused on offering an effective retirement plan: age doesn’t always equate to the method in which employees prefer to receive retirement planning financial wellness education. For example, it was Millennials who voiced a preference for in-person meetings over the ages 50+. By contrast, respondents age 50+ actually favored electronic training slightly more than Millennials, CUNA found.

Finally, while employers may believe they are offering an effective retirement plan because participation rates are high, don’t assume that employees understand how to maximize plan benefits. The CUNA survey responses show that, clearly, there is room to improve education efforts:

  • 30 percent: I know what the plan is, but I could use some help with the tools and resources.
  • 25 percent: I’m in the plan, but I haven’t reviewed or changed anything since I first enrolled.
  • 20 percent: I am familiar with the tools and resources available to help plan for retirement.
  • 16 percent: I am confident in my understanding of my plan and how to use resources.
  • 9 percent: I don’t understand the plan or the tools and resources.

The key takeaway from the CUNA survey is that employees want and need financial wellness education, and as such, it’s a critical part of offering an effective retirement plan. Specifically, employees want help understanding how to use the plan’s tools and resources to maximize their savings. For employers finding it challenging to figure out what their employees need and how to best to help improve savings rates so their employees can retire on time, meeting their education needs seems like an obvious place to start.

Robyn Kurdek

Robyn Kurdek

Freelance writer with nearly 2 decades of financial industry experience, with niche expertise in the defined contribution (DC) industry. I also have defined benefit (DB) plan knowledge. I write all types of content for retirement plan participants, sponsors and advisors, including web copy, newsletters, white papers, fact sheets, blog posts, financial wellness articles, and more. "I speak DC."
Robyn Kurdek
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