Access to a retirement plan is key

Whether or not workers take action on planning for retirement appears to hinge on their access to a retirement plan.  As in previous years, the 2014 Retirement Confidence Survey found that respondents with a retirement account were about twice as likely  to have completed a retirement needs calculation and to have received professional investment advice.

Both of those activities are clearly associated with higher levels of preparation and confidence.  Those who had a retirement account were also more likely to have set higher savings goals, to have retired "about when planned" and to have found retirement to be about the same (or even better than) expected.

Workers know they need to save, but…

Unfortunately, workers' savings rates are still discouragingly low. Thirty-six percent say they've saved less than $1,000 for retirement, up from 28 percent in 2013.

The large majority of workers realize they need to set aside a big portion of their income for retirement. In fact, just eight percent said they need to save less than 10 percent.

But more immediate financial pressures get in the way. Cost of living and day-to-day expenses head the list of reasons why workers don't save (or save more) for retirement, with 53 percent of workers citing these factors. Debt is also a big concern among 58 percent of workers.

Plan design can help bridge the gap

Historically, the focus has been on encouraging employees to save through education. But education alone hasn't broken through the human tendency toward inertia. Employers can make a bigger impact  by offering retirement plans designed to nudge employees into saving. As a financial professional, you can help plan sponsors make those plans as successful as possible.

Plan features like automatic enrollment and automatic escalation are proven to make a difference in helping employees prepare for retirement by working with participants' typical behavior instead of against it.

Guidance from financial professionals is also a critical component of a successful plan. Working one-on-one with participants can help them understand how to make saving a priority and budget to manage debt so there are dollars to save.

Everybody wins

Creating more effective retirement plans pays off for everyone:

• Employees get to feel better about their retirement—and worry less.
• Employers get workers who appreciate their retirement plan.
• Financial professionals get highly satisfied employer clients and the opportunity to work with employees, as well.

Use the new EBRI study results to kick off conversations with plan sponsors. By putting forth this extra effort, you may be surprised what you, your clients and their participants can get out of it.