That being said, my first full day at CFDD 2014 raised more questions than answers for this admitted retirement plan layman.

If auto-enrollment and auto-escalation are the panacea to plan participation numbers, why doesn't everyone do it? It seems like a no-brainer to even an outsider like me.
And while we're at it, why the obscenely low initial savings rates? There's little debate over our country's anemic savings rate, so while don't advisors push plan sponsors toward higher startup savings rates? Forget the 2 percent and 3 percent rates and walk in the door with something like an auto-enroll 6 percent.
I'm sure this is old hat for veteran advisors, but piggybacking a 2 percent auto escalation onto an employee's salary increase sounds like genius. Not only does it dull the pain, it forces the employee to act to stop saving more, rather than initiating it. We all know how much employees want to save for retirement. But we also know how much they actually like doing it. This solves both problems.
So, that investment menu employees face? It's intimidating as hell. One might say even paralyzing. Plan options have grown steadily over the last 10 to 15 years, but I'd argue this is one thing that could stand a little shrinkage. Hell, we saw a classic market correction just this week. Why not course-correct this bull market of plan options? Give employees like five, six or seven choices. Something manageable. I know, we're Americans, we always want more. Bigger is better. Blah, blah, blah. … Trust me, employees need a Spartan selection of investment options.
Finally, those quarterly statements. Why in God's name do we tell employees that 401(k)s are long-term investments and then turn around and give them a report every couple of months? We constantly throw these volatile numbers in their already jittery faces, but tell them not to pay attention. Of course they're going to freak out. Why not an annual statement like the one the Social Security Administration sends out? And while we're at it, why not downplay the actual account balance and present it in different contexts? Such as a projected monthly income in retirement, again, much like the feds do with Social Security? After all, isn't that the more relevant story for employees?

Finally, I wonder about tax reform — which would almost certainly translate into retirement reform. I know we hear rumblings about it every year, and nothing really comes of it. But trust me when I tell you we endured the same start-stop game in the health business. For years, politicians threatened us with health care reform. And, well, we finally got it. And we're still picking up the pieces.

Instant Insights /

5 questions about retirement

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