RSM Resources

As with all major life events, retirement — andthe financial planning that precedes it — can trigger an avalanche of emotionsand expectations. The blend of optimism, anticipation and uncertainty thatcomes with preparing for "life after work" directly influences howemployees approach retirement planning and colors how they perceive theiremployer’s retirement plan.

Companies can address these issues head-on andmaximize the value employees place on the benefit by developing a comprehensiveemployee communication and education strategy. By promoting the importance ofretirement planning and providing customized information and resources, anemployer can showcase its retirement program as a competitive advantage andrecruitment tool.

A call to action
Many Americans clearly need to save soonerand save more for their retirement years. A May 2005 survey from the SpectremGroup showed that employees’ attitudes about retirement planning have changedsharply. According to the report, 31 percent of 401(k) plan participantsbelieve they are not saving enough for retirement, which is nearly three timesthe percentage of those who responded the same way in a 2000 survey. Despitethat concern, 63 percent of plan participants say they will have enough to livecomfortably in retirement. These responses indicate how conflicted employeesare about what to expect from their retirement savings.

Similar findings from the 2005 RetirementConfidence Survey, conducted annually by the Employee Benefit ResearchInstitute, show that not only are employees behind on their own schedule forretirement savings, they lack a clear understanding of how much they’ll need.The survey showed that 42 percent had attempted to calculate what amount ofsavings they require for retirement. However, while 35 percent said they askeda financial advisor for help, another 37 percent estimated the amount on theirown, and 10 percent guessed at what their savings should be.

"This survey reaffirmed what has long beenknown," says Variny Paladino, director of the Retirement ConfidenceSurvey. "Many Americans need to take retirement planning more seriouslyand develop a plan to ensure they have resources when they stop working."

Creating a communication strategy
Regular communication, delivered both inperson and though multimedia educational materials, can strengthen employees’retirement planning skills while building loyalty to their employer. Becauseretirement planning is unique for each individual, employees typically wantopportunities to ask questions one-on-one and to conduct their own researchindependently, using convenient resources they can easily share with familymembers or financial advisors. When developing your approach to retirementcommunication and education, consider these key questions:

How well do employees know your company? Especially if you’ve recently added new employees, whetherthrough organic growth or acquisition, it’s essential employees understand yourretirement program within the context of your company’s mission, vision andvalues. Be sure to illustrate the "big picture" of your employeecompensation and benefits program, and explain how it ties to your company’s strength,success and business strategy.

What are the demographics of your workforce? Employees in their 20s and 30s view retirement differentlythan those in their 40s and 50s. The resources you provide should respond toeach phase of life and help employees plan for retirement in the short, mediumand long term.

Does your organization have retirement"hot buttons"? If you’verecently adjusted your retirement plans, or if performance has substantiallychanged, address those issues before launching an educational program.Anticipating and responding to likely concerns reinforces your credibility withemployees and clears the way for a meaningful discussion about their retirementplanning needs.

How do employees access information? To be most effective,employee materials should be tailored to their work environment. Is yours ahighly wired company, with PCs on every desk, or do workers have limited accessto online tools? Can employees learn about retirement details during workhours, or do they need quick-hitting resources they can scan during a 15-minutebreak or at home? Employees will most value tools that are easy to access andwhich won’t interfere with their work responsibilities. Varying needs amongemployees may require a multifaceted communications approach.

"Not all employees learn the same way,"says Mike DiCenso, a vice president of sales with RSM McGladrey RetirementResources, which offers a life event education curriculum for retirement planparticipants. "Some learn by seeing, some by doing, and some by seeing anddoing. A multimedia format allows plan participants to choose what works bestfor them personally. Also, plan sponsors generally don’t like to holdenrollment meetings during business hours. A multimedia format using workbooks,Web books and Web movies allows plan sponsors to offer plan participantsinteractive e-education they can access from home."

While the particular dynamics of your workforcewill define which communication tools best support your retirement planningprogram, some best practices apply across all organizations:

Don’t limit communication to annual enrollmentor election periods. Make retirementplanning a topic throughout the year with ongoing retirement-related news andinformation. Sponsor lunchtime speakers and offer hands-on learningopportunities such as traditional or online courses.

Begin at the beginning. Don’t assume employees already understand financialmarkets and investment choices. Start by covering the basics of why it’simportant to save and how savings vehicles operate. Put glossaries and otherresources at your employees’ fingertips, so they can cross-reference materialsor look up new or unfamiliar terms.

Show employees what retirement really means forthem. Put your retirement program inreal-world terms by distributing individualized updates that show eachemployee’s savings rate and the long-term impact of saving earlier orincreasing his or her contributions. Also be sure your employees know how tocontact agencies such as the Social Security Administration or Medicare tolearn how federal programs may supplement their retirement savings.

A cultural shift
In her introduction to New Kid on theBlock: Financial Planning as an Employee Benefit, Melody A. Carlsenexplains how recent world events have made planning for the future especiallyrelevant and highly personal.

"The notion of putting things off, whateverthey are and for whatever reason, has become unsettling as opposed toconvenient," Carlsen writes. "Financial planning, wherever it fits inthe bigger scheme of things, is no exception. Already in its stride prior toSeptember 11th, financial planning as an employee benefit is moving rapidlyforward. The need for financial planning, the interest in financial planning,and the opportunities to institute and advance it are ripe."

While emotional triggers can raise employees’awareness, their interest stops if they don’t know how to access theinformation for creating a solid retirement plan.

"The companies that get the biggest return ontheir investment in these programs are those that commit resources to makingsure employees understand those benefits and the linkage to a company’s desiredculture," say Bruce Pfau and Ira Kay, authors of The Human Capital Edge."Shareholder value and employee commitment are markedly higher atcompanies whose workers know how much their package is worth and what theirbenefits mean to them personally."

An empowering investment
Through education and communications that empower employees to plan fortheir own retirement, employers can fulfill their fiduciary responsibilitywhile strengthening employee commitment and confidence. That long-terminvestment can pay off for your company and for your employees through allphases of their personal and professional lives.