PLANSPONSOR - April - May 2022 - 14

'Distribution Planning Needs Improvement'
UPFRONT
MANY plan participants have approached
retirement income planning informally.
Yet, experts say, typically more is needed
to prepare workers for retirement.
Turning to data from its Retirement
Security Survey: Retirement and Income
Solutions, Principal Financial Group
examined employers' observations of their
workers' retirement income planning.
The company's goal was to better understand
how employees approach the task
and to see how, where necessary, their
process might be improved. Eight percent
of employer respondents said employees
have incorrectly determined their target
age to retire; 11% said employees are inadequately
reviewing their estimated Social
Security benefits; and 13% noted their
workers are miscalculating how much
savings they ultimately will need.
Employers said retirement plan
participants were poor at creating a formal
retirement income plan (29%), meeting
with a financial adviser regarding saving
and income planning (23%), and reviewing
their
expected
retirement
health-care
costs (33%).
" What this effectively tells you is
TIDBITS
Well-Being
Webinars Work
EBRI evaluated
findings from its 2021
Employer Financial
Wellness Survey for
how webinars on
various well-beingrelated
topics
affected workers'
use of their 401(k).
After attending
a financial
well-being
webinar, participants
upped
contributions by
an estimated
$649 to $988.
Source: Employee Benefit Research Institute
After attending
an emergencyfund
webinar,
older employees
requested fewer
new retirement
plan loans.
After attending
an investments
webinar, older
employees who
make lower
contributions
" improved " their
asset allocation.
After attending
a budgeting
webinar,
employees
increased their
retirement plan
contributions.
it seems to be fairly informal, " says Sri
Reddy, senior vice president for retirement
and income solutions at Principal.
" We know that, as Americans get
older and they get near the retirement
zone, many do go investigate their Social
Security earnings and records; they
do look at what their benefit payments
could be or should be; they look at what
Medicare enrollment looks like. But, as
you go toward creating a formal retirement
income plan, very few people invest
the time, energy or effort to understand
how to decumulate assets, which is what
creates a gap in confidence, " Reddy says.
Further, according to the report, 98%
of plan sponsors said their employees
could use help calculating how much
they should have saved to retire comfortably.
The need to meet with a financial
professional regarding retirement saving
and income planning was
second at 89%.
Reddy explain that policymakers,
through legislation, have recognized the
need to show workers how their accumulated
total balance will break down into
monthly amounts. " Most people don't
know if it will translate into what they
need and if that will be enough for them. "
He advises that, to help participants, plan
sponsors can provide retirement income
calculators that include lifetime income
illustrations.
Many plan sponsors are putting more
resources into employees' financial wellness
programs, but they must ensure
the program targets workers' needs and
tracks the results, Reddy says. " There
are many providers, including Principal,
that supply plenty of tools, guidance and
education-we have on-site enrollers who
can assist-but it may not be enough, " he
says. " It may not provide the one-to-one
guidance, counseling and coaching that
employees are desiring. " -Noah Zuss
14 PLANSPONSOR.COM April - May 2022
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PLANSPONSOR - April - May 2022

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