Beyond Retirement Options: Are You Providing Retirement Education?
The nonprofit Transamerica Center for Retirement Studies (TCRS), in collaboration with insurance provider Aegon, has released The Changing Face of Retirement: The Young, Pragmatic, and Penniless Generation, a report evaluating the state of retirement preparedness among workers in their twenties (twenty-somethings) in 12 North American, European and Asian countries. The verdict of the report? Not great. The research found that the majority (59 percent) of workers between the ages of 20 to 29 expect to be financially worse off in retirement than their parents’ generation.
“For many around the world, their twenties bring an exciting time with seemingly endless possibilities,” comments Catherine Collinson, president of TCRS, in a news release announcing the publication. “But, saddled with student debt and scarce job prospects, our research shows that today’s twenty-somethings are finding it difficult to embark on their careers and gain their financial footing.”
The reports goes on to say that twenty-somethings around the world need to take even greater levels of personal responsibility for their financial security and retirement outcomes than older workers. But what about the employer’s responsibility for providing employees with retirement options—and educating them on the value of buying in?
“Twenty-somethings are ready and willing to take responsibility of their financial futures, but need the support of employers, retirement providers and governments to help them achieve their retirement goals,” Collinson says. “Initiatives that can make a difference include better workplace retirement benefits, financial information that is straightforward and user-friendly, and more generous tax incentives.”
A more generous employer matching contribution in a workplace retirement plan can also encourage savings, with one-third of twenty-somethings surveyed citing this as valuable. In the U.S., it is well known that matching contributions to a 401(k) or similar plan drive up savings rates. Thirty-nine percent of American workers in their twenties responded in the survey that a more generous match would encourage them to save more. Thirty-two percent of U.S twenty-somethings said they would be encouraged to save more with simpler investment products that are easier to understand. Lastly, one-third of U.S. twenty-somethings stated that more generous tax breaks on long-term savings and retirement plans would encourage them to save.
What can employers be doing to help these young workers?
For starters, HR can offer guidance to young workers by raising awareness of retirement issues. While you can’t offer investment advice yourself, consider inviting your company’s financial advisor in to host a presentation explaining retirement strategies. A strong theme revealed by the survey was that younger employees want more information on savings products and better access to advice. The report suggests that because the largest share of survey respondents, 24 percent, finds friends and family to be the most important source of advice suggests an unmet need for professional financial advice.
The initiative you take in meeting that need can be a valuable part of your compensation package for new employees—not to mention a valuable asset for employees on the cusp of retirement. In addition, you might consider sharing with employees the information that comes across your desk about trends in retirement. Whether posting this information on the break room bulletin board or including it in an office newsletter, it could help the employee to put retirement planning back on top of their to do list.
Interested in the full Transamerica report? Read it here.
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