About Plan Health Solutions

Our research confirms that the American dream of retiring comfortably after a lifetime of work will be impossible for many.¹

Four out of five working households have retirement savings that is less than one times their annual income.²

[W]e are seeing what ought to be considered an era of great changes – people living longer, healthier lives with improving opportunities and possibilities. Yet the institutions to help people through retirement aren’t improving in tandem.³

The writing is on the wall for most Americans: they will not be financially ready for retirement when the time comes. Among working households ages 25 to 64, a shocking 92% do not have retirement account balances that meet minimum savings benchmarks as recommended by the financial services industry.⁴ This leaves the country with an estimated retirement savings gap of $6.8 to $14.0 trillion – a big number at either end of the spectrum.⁵ This shortfall prompted the National Institute on Retirement Security to articulate a rather depressing conclusion: “The hope of retirement security is out of reach for many Americans in the face of a crumbling retirement infrastructure.”⁶

In the face of those numbers and the corresponding doom and gloom, we offer a surprise for many employers: there is room for optimism. There are indeed steps you can take to make a difference. Can you, acting alone as one employer, materially impact a nationwide retirement savings shortfall of trillions of dollars? Not likely. Can you, acting alone as one employer, take purposeful and thoughtful steps to positively impact the retirement readiness of each of your employees? To improve the present and future prospects for their families? To improve the short- and long-term bottom line of your company? Most definitely.

The path to improving the financial health of your employees, your company’s retirement plan, and your company’s profits begins with a sense of optimism and a commitment to taking specific steps calculated to drive results. Whatever your plan’s current status may be, we view the steps to better financial health as starting in one of the following four categories:

Plan Design

People want to save. Have you considered the available plan rules that can make saving easier? Do your plan’s rules provide adequate immediate incentive for increased savings?

Participant Education

Participating in a retirement plan and knowing how much to save can be confusing, even with fancy (but rarely used) online calculators. How can you effectively provide participants with the personal education about the plan as well as their individual retirement needs? This knowledge is necessary for not only the initial decision to invest but also the ongoing commitment to participate in a retirement plan.

Proactive Services Implementation

Handling the investment of a retirement account can petrify even the employee who fully understands the plan and the importance of saving. Equities? Bonds? Interest rates? Large Cap Growth? Large Cap Blend? Target date funds? Glide paths? The terminology alone scares away many employees. Are you utilizing the educational and risk-based investment tools that, instead, make participants comfortable with a career-long commitment to saving.

Plan Health Measurement

Your company measures most aspects of its business. Revenues. Expenses. Risk. Profits. Are you performing a similar analysis on the return on your investment of sponsoring a retirement plan? Are you seeking growth in the plan that you can leverage with current and potential employees, as well as with the providers being paid to support your plan?

Stronger Plan Health is indeed obtainable. There are a variety of different reasons for pursuing it. Your company might simply care about its employees. You might acknowledge that when your company invests in your employees’ futures, prospective employees want to come to work for you and current employees want to be more productive. You might recognize that by getting employees on track to retire when they are ready, your company’s profits don’t suffer at the hands of unproductive employees who remain on the payroll simply because they have no other choice. With improved Plan Health and an increased number of employees on track for retirement, everyone wins. Your employees are prepared for retirement, pricing for retirement plan services providers decreases, and the service providers likely still receive greater revenues through the growth of the plan.

Whatever the current condition of your plan, we urge you to consider specific and purposeful steps to improve its Plan Health. Your employees and their families, your company and its bottom line have much to gain as that improvement occurs.

¹ Nari Rhee, Manager of Research at the National Institute of Retirement Security, June 2013.
² National Institute on Retirement Security, “The Retirement Savings Crisis: Is it Worse Than We Think?”, June 2013.
³ Joshua Gotbaum, Director of Pension Benefit Guaranty Corporation, June 23, 2013.
^{4, 5, 6} National Institute on Retirement Security, “The Retirement Savings Crisis: Is it Worse Than We Think?”, June 2013.

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