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Beyond Funds, Fees, and Fiduciary Governance

Is Your 401(k) or 403(b) Plan Really "Working?"

If I asked you whether your retirement plan is really “working,” how would you answer that question? What is your definition of a working plan? Have you even thought about it? Are you really focusing on the right things in your 401(k) or 403(b)?

You spend all this time monitoring the plan’s funds and fees, and worrying about your fiduciary governance; but are your employees actually on track to have enough money to retire? And what does it cost you as their employer if they have to delay retirement?

Studies show that 54% of Americans are stressed about their financial situation. Consequently, they spend an average of 13 hours per month at work worrying about their finances. This estimated annual cost for you, their employer, for this lost productivity is estimated to average $7,000 per year for each financially stressed employee.

This also often leads to behaviors that derail retirement savings. For example, one in four pre-retirees take money from their retirement plans, and 50% of workers age 60 and over plan to work until age 70 or later. This costs you somewhere between $10,000 to $50,000 in insurance and benefits for each year an employee delays retirement. Plus, the lack of advancement for your younger workers can increase turnover, with an average cost of $15,000 per employee that you consequently lose.

Bottomline...delayed retirements dramatically impact your bottom line! There is “a smarter way” to gauge the success of your 401(k) or 403(b).

intellicents has a five step process for improving the retirement readiness of your workforce, centered on both you the plan sponsor and your participants:

  1. Define Success – We recommend you strive to achieve 75% of your participants being on-track to maintain their same standard of living during their retirement years as they are accustomed to during their working career. Don’t worry, we can measure that for you; and for most employers it’s below 30%. The real shock will come when we show you the projected liability you have for delayed retirements!

  2. Implement Plan Design Based on Behavioral Science – Auto everything…enrollment, contribution escalation, AND investment. Plans that utilize auto features have a 21% higher participation rate than plans that don’t. Your employees will thank you for it when they can retire on time AND with enough money.

  3. Implement a Total Financial Wellness Program – Our intellicents university curriculum includes both education and onsite financial planning services to promote participant engagement. How can we expect Americans to save more when they are maxed out on three to five credit cards, and have no idea how to create a household budget? Half of workers say that retirement, financial, and health care planning programs would be helpful in increasing their productivity on the job.

  4. Add Participant Advice – This is what your participants need and want. Our advisors come onsite for one-on-one meetings, and all of your people will have access to our allmymoney financial wellness app. A 1% improvement in their investment performance could boost the number of your employees that are 80% to 100% retirement ready by 15%. Smart people supported by great technology!

  5. Constantly Benchmark Progress – You will receive an annual Plan Sponsor Aggregate Retirement Readiness Report detailing the progress we have made; plus your participants will get an annual retirement readiness report projecting whether they are on track to achieve a comfortable retirement. And your report benchmarking your looming liability for delayed retirements should markedly improve.

When you help your employees to be on target for a successful retirement, everybody wins. But what about monitoring the plan’s funds, fees, and fiduciary governance? It’s important. Don’t worry…we do that, too.

Your intellicents retirement plan consulting team can take on the fiduciary responsibility of selecting and monitoring your plan’s investment lineup, and negotiating with your recordkeeper for great service at competitive fees. More importantly, however, they will help you establish goals and benchmark what percent of your employees are actually on track to a successful retirement outcome. Isn’t that why you have a plan in the first place?

Let intellicents help you offer a retirement plan for your employees that actually “works.”

Data Source: MassMutual@work – “Is Delayed Retirement Impacting Your Bottom Line?”, October 2018



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