PLANSPONSOR - August/September 2019 - 26

" I'll Have
Enough
Money for
Retirement "
According to sources, Americans are at
risk of being unable to maintain their
standard of living for what may add up to
decades in retirement. Yet most of those
people are upbeat about their finances,
with 67% feeling confident they will
live comfortably in retirement, the Employee Benefit Research
Institute (EBRI)'s 2019 Retirement Confidence Survey found.
" Somebody may see that they have a $100,000 balance and
say, 'That's huge, I'm going to be OK in retirement,' " says Laura
Taylor, a Grand Rapids, Michigan-based senior associate in the
employee benefits consulting group at Plante Moran. " They don't
realize that's probably going to mean only a couple hundred dollars
a month for them in retirement, and that won't be nearly enough. "
Participants who are automatically enrolled into a 401(k) plan
and defaulted into a target-date fund (TDF) often are unaware they
will not get a pension-plan-style guaranteed benefit when they
retire, says Julie Doran Stewart, senior vice president at Sentinel
Pension Advisors Inc., in Wakefield, Massachusetts; her firm was
a 2019 PLANSPONSOR Retirement Plan Adviser of the Year mega
team finalist. " [Those participants] think, 'If I put money in the
2045 Fund and then I retire in 2045, I'll be all set,' " she says. That
makes education such as speaking with a financial adviser and/or
using a retirement calculator crucial, she says.
American workers estimate that they need to save a median
of $500,000 for their retirement, TCRS research found. Based on
the 4% rule, that breaks down to $20,000 per year for 25 years; yet
only one in 10 workers has used a retirement-income calculator to
figure out what they actually will need. " Many are just guessing, "
Collinson says. " It's really important that plan sponsors help their
employees come up with a formal, personalized estimate. "
Talking with a sponsor or adviser who walks them through
how to use a calculator to get an accurate estimate helps, Taylor
says. " They can realize, 'Oh, I have $100,000 in my account, but
that isn't much.' " That can motivate them to save more, she adds.
" I Can
Retire Early "
The median age at which retirees
responding to the EBRI confidence
survey actually retired was 62, while
worker respondents expect to retire at 65.
One of the biggest long-term financial risks Americans face
is premature retirement, says Steve Utkus, a principal and director
of the Vanguard Center for Investor Research in Valley Forge,
Pennsylvania. " Many people make a mistake in retiring too early, "
he says. " Many aren't aware of how much it will help them if they
continue to work and save until they're in their late 60s. "
Americans approaching retirement need help understanding
the key decisions they need to make-such as retirement age-
that will drive their finances in retirement, Utkus says. " There are
important planning considerations, and they make a big difference
in how people fare in retirement. People, especially those 55
and older, could use more education on these critical drivers. "
People benefit from straightforward talk about the realities
of what retirement looks like now, says Ross James, head of financial
planning at Sentinel. " It's important for people to understand
what the 'new normal' is in retirement, " he says. " Retirement
today for many participants is very different than it was for their
parents. The reality is that when I work with people on a financial
plan for their retirement, they rarely decide, 'When I get to 65,
I'm retiring, cold turkey' any longer. "
The First Step Toward Retirement Planning
Many people have trouble starting to plan
for retirement. " It's a true fantasy to think,
'I'm going to golf and travel the world,' "
says Jason Chepenik, managing partner
of Chepenik Financial in Orlando, Florida,
the 2019 PLANSPONSOR Retirement
Plan Adviser Large Team of the Year. " Few
people achieve that. " Besides suggesting
employees meet, one on one, with an adviser,
Chepenik recommends the following to
help them start developing a plan:
One-minute videos. Invite employees
to each create a one-minute video
describing their vision for their retirement.
Have your company's C-suite executives
make and showcase their videos first.
" You can make thinking about the future
fun and engaging, and make it come
alive, " Chepenik says. " Doing a video helps
people start to think through, 'What does
retirement look like to me?' If they say it
out loud, they can hold themselves accountable,
and we, as the adviser, can help them
map out how to make it happen. "
" Milestone moment " gifts. Do this
when employees reach key birthdays such
as 30, 40, 50 or 60. " You can give them a
book from the plan committee, wrapped
and left on their desk, " Chepenik says.
" The book could be about financial planning
or a common retirement dream such
as traveling. You can write a note with it
that says, 'Hey, this is a milestone moment;
take advantage of this opportunity to think
26 PLANSPONSOR.com August - September 2019
about your future.' It's a very inexpensive
way to get them to stop and think about it. "
A retirement storyboard. Asking
people to create a storyboard that visually
illustrates their concept of retirement could
be done at a group education meeting for
pre-retirees, for instance. Chepenik recalls
one man who made a storyboard that
centered on him moving to Chattanooga,
Tennessee, and building a log cabin there.
That led to him working with Chepenik
Financial to achieve that goal. He is now
living in his log cabin. Says Chepenik,
" The first step to coming up with a plan for
your retirement can be as simple as cutting
out pictures of what your vision of your
future would look like. " -JW
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