My 30+ year professional career has been dedicated to helping employees get to and through retirement. The long-time formula hasn’t changed very much: save with discipline, invest, repeat. Then, spend time on the beach. However, at a time when we’re competing to retain and recruit key talent, I’m wondering if the traditional view of retirement plans has changed. Is it outdated?
Don’t get me wrong, particularly in a world where private sector pension plans are hard to come by, it’s in the best interest of our country and its workforce to save for a time when they no longer receive a paycheck. But our employees’ collective mindset is evolving. And here’s what they are saying – 84% of workers say that the idea of “financial independence” resonates more than the traditional concept of retirement1. So maybe, just maybe, the commercials of a 65-year-old retired couple playing golf or frolicking on the beach isn’t the image that’ll get the employee of 2022 to act.
Ideally the core tenets of financial health (saving early, living within your means, managing debt and investing wisely) would be taught long before the first paycheck is ever received. However, according to Standard & Poor’s Global Financial Literacy Survey, less than 60% of Americans are considered financially literate, let alone an expert.2 Let me personalize that a bit. My sixteen-year-old high honors, 99th percentile SAT daughter asked not long ago “What is inflation?”. We have so much work to do.
Instead of waving the traditional retirement carrot, employers and their partners need to flip the narrative, meet employees where they are and get back to basics. Coupling competitive financial benefits with financial literacy fundamentals helps employees make progress towards financial independence.
This sounds like a lofty, perhaps even a far-fetched goal. However, with nearly two thirds of employees critically re-assessing what they get from their employer, every little bit counts.1
As an HR professional, challenge your organization to take action this year to help your employees make their “next right decision” on a path of financial progress.
Here are four action steps to consider:
- Over the last few years, technological advancements have allowed for personalized support, messaging and even advice. Meet annually with existing benefit partners and new vendors to learn about tools and resources you can leverage and promote to employees. There’s a lot more out there today.
- Speak to benefits holistically – during open enrollment, remind employees about employer sponsored savings plans (aka Financial Independence plans). Consider adding a “financial checkup” to your health assessment required to receive a financial incentive.
- Review plan design to promote positive behaviors – incentivized employer match, automatic enrollment, and immediate plan entry may be low hanging fruit. Ask your service providers for suggestions on how to optimize your plan – this is not something you need to do by yourself.
- Lack of emergency savings and debt management are two of the most significant impediments to long term financial success. There are more tools and resources than ever before on this front, and your employees need help tackling these growing issues.
I’ll leave you with an inspiring Chinese proverb, one that applies both to employers and employees:
“The best time to plant a tree was 10 years ago, the next best time is today!”
1 Voice of the American Worker Survey 2021
2 Global Financial Literary Excellence Center (gflec.org/initiatives/sp-global-finlit-survey