Retirement Planning Behavior Influenced by Technology
Retirement planning is getting a boost, thanks to some innovations in technology.
According to a recent article in FinancialPlanning, the research found that goal-setting, combined with innovative website design, can help influence savers and improve retirement planning. The Behavioral Finance Institute for Innovation helps to gain an understanding of how Americans make financial decisions and how to help them optimize their retirement planning decisions. The research was recently presented at the SourceMedia In|Vest conference.
The objective? To overcome workers’ retirement planning roadblocks when it comes to their personal finances. Voya found in a consumer survey on retirement planning behavior that more than twice as many people update their social media profiles each year as review or adjust their retirement plan. Not surprisingly, this trend was more apparent among younger demographics — Millennials were more than four times as likely to update their social media profiles annually than engage in retirement planning activities.
During its research, Voya tested a variety of retirement planning simulations. In one such scenario, the financial services firm tested whether a suggested retirement planning savings allocation displayed on a website would impact the amount people elected to save. The randomly selected percentages varied from 6% to 11%. Voya found that the higher the percentage displayed on the website, the more the percentage of participants would commit to saving.
That is, up to a point. Voya found that the closer the display inched to the 11% savings goal, the more people backed out. Basically, they were intimidated by how much they had to save for retirement, so instead, they opted not to save anything. Based on the results, Voya set the default target display rate to 7%. Voya also provides its retirement planning research to employers who are thinking about where to set their own target rate for their employee population.
Voya’s innovation team also examined how digital design affects consumer retirement planning behaviors. As such, they revamped three sections of the company’s retirement planning website, the FinancialPlanning article noted:
- Moving key information closer to the decision-making point,
- Simplifying language, and
- Using traffic light colors (green, yellow and red) to help employees self-select whether they wanted to save on their own, with help, or not at all.
Voya’s research findings once again emphasize that technology is gaining a strong foothold in the retirement planning space. Not only that, technological innovations — even simple ones — seem to be making a sizable positive impact on participant interactions and their retirement planning behaviors. Plan sponsors should explore opportunities to implement technology into their own retirement planning offerings for participants and seek out providers that offer plan design innovations and digital tools designed to help increase savings rates and overall retirement readiness.
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