PLANSPONSOR - June/July 2019 - 2

Insights
Retirement Visualization
I
hate thinking about the future. I don't like trying to plan for
something that may or may not happen years from now, or
imagining " what might be. " My husband is, in many ways, the
opposite and doesn't understand why I get overwhelmed when we
try to talk about things down the road. Thinking about a few years
from now is fine, but decades from now? No, thank you.
I have a hard enough time being fully present in the here
and now. I'm often juggling between work and home life, as are
many other professional women. Perhaps that partly drives my
resistance to thinking about the future-feeling I need to get my
current state of affairs in order first.
For whatever reason I avoid planning for the future, it also
makes it harder to think about and plan for retirement-even
though I've worked on PLANSPONSOR for 16 years and know a
successful retirement requires it-and needs decades away.
In thinking about needs, I have to say
the industry has made some strides. When
I first wrote about retirement, it was rare that
any guidance about how much to save advised
anything more than to qualify for the match. In
general, this will not be enough, with an average
match leading to only a 6% participant deferral.
In general, I think the communication about
targeting 10% to 15% has been productive, if for
no other reason than to help promote what may be more realistic
targets of what people should be saving, but, let's be honest,
there is no magic number.
Each person's circumstances are unique, and what is genersomething
like, " Project to need 70% of your current income in
retirement. " Why? In all of the communications I've seen over
the years, not one piece stands out for telling me why I'll have
30% less in expenses than I do during my working life.
In fact, if I think about it, why wouldn't my life get more
expensive? How much of the day is spent at the office where
no money is being spent? Might people, once weekdays are
free, want to spend money going out in the community,
enjoying food or entertainment they hadn't had the chance to
earlier? I'm not saying we're all going to buy a yacht or move
to the beach-I'm looking at you, recordkeeper retirement
brochures-but even a movie a week would be an expense I
currently don't have.
This comes back to my earlier point. It's hard to plan when,
like me, you try to avoid thinking of what the unknown might
I'm not saying we're all going to buy
a yacht or move to the beach ... but
even a movie a week would be an
expense I currently don't have.
look like or entail. But perhaps it is good to encourage participants
to do so.
At one of our PLANSPONSOR National Conferences
ally best practice for one, or even many, will likely not be for a
large group. I was reminded about this recently when having
a conversation with a woman in her 60s who realized she's
eligible to begin collecting Social Security in a few months.
On one hand, she was aware of the general guidance that she
should delay collecting for as long as possible, to get a larger full
amount per check. However, she said, she had recently been
downsized at her employer (this recalls statistics from EBRI
about how many people want to work past retirement age but
can't because of factors beyond their control) and was trying to
determine what retirement might look like. She had some retirement
plan savings but was now stuck, trying to figure out how it
all will work together and what her life will cost. She hadn't really
thought about retirement before, she admitted; she just figured
she would work forever.
That conversation made me reflect on the other rule of
thumb we so often tout: Determine potential income needs
in retirement. Most calculators and traditional guidance say
2 PLANSPONSOR.com June - July 2019
(PSNCs), I recall that one of the providers in the exhibit hall had a
program in which you took a picture of yourself and it automatically
aged you. The idea was to give you a sense of yourself in your
retirement years. While I was not a proponent of seeing myself
white-haired, I can now appreciate the value of the exercise.
While plan sponsors really can't control much in the way of
participant behavior-aside from urging people to save as much
as they can-they can work with advisers and recordkeepers to
encourage participants to consider what they might want their
life to look like in that far-off, or not-so-far-off, post-employment
future. The earlier they start sketching out some mental
picture, the more they may be apt to engage with the saving
it takes to get there. Planning for other large purchases-say
a house or car-usually entails looking at various homes or
vehicles then determining what you need financially to make
those purchases. If we think about participants being able to
buy their retirement lifestyle, perhaps visualization can help do
the same thing.
-Alison Cooke Mintzer, Editor-in-Chief, PLANSPONSOR
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PLANSPONSOR - June/July 2019

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