Originally posted on http://eba.benefitnews.com.
Through the use of education and communication, employers and benefit advisers can have a huge impact on their employees’ retirement readiness. Making that education meaningful, however, is key to employee engagement and understanding. Here are five tips from Grinkmeyer Leonard Financial and investment advisers with Commonwealth Financial Network on how to make retirement education meaningful.
1. Paint a picture of their “future self”
Employees who can envision their future selves are more likely to understand their financial needs during retirement. The advisers with Commonwealth Financial Network suggest one strategy for embracing your future self is to have employees envision not only their financial retirement goals, but also lifestyle retirement goals. By forcing today’s self to recognize how he or she will look in the future, employees are more likely to save for that future, they say.
2. Help them plan for an achievable number
For too long the financial services industry has focused on the daunting pot of money people should accumulate in order to retire, the advisers say, adding that breaking the number down to monthly saving increments is less scary and seems more achievable to employees.
3. Account for health care
A 2013 study conducted by Fidelity’s Benefits Consulting Group estimated that out-of-pocket health care costs for a 65-year-old couple with no employer-provided retiree health care will be $220,000, assuming a life expectancy of 17 years for the man and 20 years for the woman. As part of a comprehensive financial education plan, the Commonwealth Financial Network advisers say it is imperative that medical and insurance costs be incorporated into the retirement planning discussion.
4. Start ’em young
The power of compounding interest is evident in retirement plan balances, the advisers say, adding that evidence has shown the benefits of starting to save at a young age. Interest adds up over time, so even starting to save at 30 instead of 40 can save exponentially more money.
5. Keep the message relatable
Paramount to the success of any education strategy is using simple terms and relatable examples to illustrate potentially complex issues, the advisers say. For example, telling a group of participants that inflation will erode the buying power of their dollar over the entirety of their retirement may be lost in translation, they say. But telling that same group of participants that the $5 sandwich they enjoy today will cost $22.93 in 30 years will likely keep their eyes from glazing over.