Just the mention of the word “retirement” conjures up a variety of visions. Lounging on an island beach. Days of golfing. Reading that stack of books.
But for some, who are stressed about their financial status on the road to retirement, the visions may be different – delaying retirement and staying on the job years longer than expected, working a part-time job, downsizing their lifestyle – all to pay the bills in the golden years.
BrightPlan Financial Wellness delivers technology and human financial planners to give your employees the ability to model their retirement plan using thousands of simulations showing various market conditions. Employees can actually see where they are headed and get a more accurate vision locked in their mind about their retirement years…maybe even retiring early.
According to PwC, more than half of employees are stressed about their finances to the point that they plan to postpone retirement. Research conducted by Prudential notes that financial planners believe retirements are delayed due to inadequate retirement savings. And that a one-year increase in average retirement age can increase workforce costs about 1-1.5% annually.
Helping employees retire “on time” can be a win/win for both the employee and the employer. Research from Prudential specifies an incremental company cost of over $50,000 for an individual whose retirement is delayed, representing the cost differential between the retiring employee and a newly hired employee.
Among the best practices recommended by Prudential for employers to help their employees be financially secure and keep them on track to retire on time is the adoption of a comprehensive financial wellness program with education and features to assist them in making informed financial decisions.
The average retirement age is now 59, according to a recent Harris Poll commissioned by NerdWallet. That’s years earlier than the traditional retirement age of 65. But in many cases, the shift to retirement was not elective.
For more than one-third of respondents, retirement wasn’t their choice. Health issues and job loss also contributed to the change in their career status earlier than expected.
The survey also revealed that over half of the group have regrets about the way they saved for retirement – from not starting to save sooner, to being too cautious, to not planning how much they would need to live in retirement. About 30% regretted not saving more aggressively for retirement.
For employees now in their 20’s or 30’s, with a target retirement age of 65, what does this potential shift to earlier retirement mean for their current savings strategy? They need an easy way to model their retirement vision according to their current savings practices.
What about longer-tenured senior employees who are even closer to retirement now? What changes should they be considering to ensure financial stability in retirement? They may be in better shape than they think for retiring on time or even early. BrightPlan gives them the ability to see how minor changes or major life events can change their trajectory.
Employees can clearly see whether their own personal Retirement Goal is on track with BrightPlan. This isn’t a universal algorithm or a formulaic approach. It’s personal and based on their current savings, their monthly contributions, the return rates of their investment vehicles, and even more factors.
The BrightPlan goal tracker lets employees tailor their lifestyle vision in retirement and see what that looks like. Shift retirement age sooner or later. Factor Social Security income. Adjust desired retirement income up or down. Add income from inheritance or a home sale.
Once these parameters are set in the Retirement Goal, they will see whether the goal is “On Track” or “Needs Attention” along with recommendations for how to get creative and shift their strategy.
The more confident employees feel about their retirement plan, the more likely they are to retire on time or early. And that’s good for them, and the company.