Connections for Success



Will Your Employees Have Enough to Retire?

While many American investors may be confident about their financial prospects, they may also be underestimating their retirement needs. Additionally, investors often admit to their lack of investment knowledge, confessing to spending more time planning home improvements, vacations or researching big purchases rather than planning for retirement.

Factors that can threaten one’s retirement security include, among other things, the cost of college education for children, becoming unemployed or underemployed, becoming physically incapable of working and/or having insufficient proceeds from defined contribution, pension or other benefit plans.

What Can Plan Sponsors Do to Help Their Employees?

The Department of Labor’s fiduciary regulations impose an implied duty on plan sponsors to promote the financial literacy of the plan’s average participant, and to educate participants on how they may save and invest through their plan. If plan sponsors offer participant guidance in the form of “safe harbor” non-fiduciary education, the plan sponsor is protected against any potential fiduciary liability that might arise from such participant guidance.

Plan sponsors should consider implementing the following best practices in order to promote their employees’ retirement readiness:

  • Evaluate Participants’ Retirement Readiness Plan sponsors can evaluate the retirement readiness of plan participants by reviewing the plan’s overall participation rate, median contribution rate and median account balance. Identify the plan’s popular investment alternatives and discuss them with participants.
  • Develop a Communication Strategy Highlight the urgency of preparing for retirement and conveying a “call to action.” Hire a qualified provider to implement a retirement readiness education program to supplement your communication strategy. Conduct education sessions on an ongoing basis to reinforce the importance of staying on track with retirement goals.
  • Motivate Your Participants Stress the importance of getting started with retirement planning. A good way to get participants to take immediate action is to provide a realistic assessment of each participant’s level of retirement readiness. Many financial advisors and plan administrators offer Internet calculators and Web tools designed to help plan participants evaluate whether they are on track to a successful and financially secure retirement.
  • Make Plan Changes Adopt plan design changes to promote retirement readiness. Certain elements of a plan’s design can heavily influence a plan’s participation rate, how much participants contribute and how they invest their accounts. Consider adopting automatic enrollment and escalation, a default investment alternative and a lower percentage match.

Get Participants Retirement-Ready

By implementing the best practices discussed, plan sponsors can help their participants become “retirement ready” and help them toward financial independence.

If you have any questions, please contact Ken Kobiernicki or your ORBA advisor at 312.670.7444.Visit for more information about our Employee Benefits Group.

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