It’s no secret that we are facing a potential retirement crisis in the United States. A study by the National Institute on Retirement Security puts the national savings deficit at somewhere between $6.8 to $14.0 trillion (yes trillion with a “t”). Based on retirement account assets, 92% of working households do not meet retirement targets (The Retirement Savings Crisis, June 2013). The chart below illustrates what we all already think we know: people are planning on working longer or forever because they are not positioned to retire. Conduct a quick poll of your people and my guess is that most will say that they are unprepared for retirement, too. You can read the studies, contemplate the charts, and brainstorm over what to do to close the gap, but at the end of day, as a President, CEO, CFO, or HR professional, is it really your problem if the average American isn’t prepared to retire? I would argue 100% “Yes”. If you are responsible for paying, hiring, or managing your workforce, then you should be extremely concerned if your people aren’t able to leave your company for retirement. The trouble with worrying about what to do with an aging workforce is one, how do you quantify the problem? and two, what do you do about it?
The first step is to understand what a delay in retirement by your company employees may cost your business. We have the tools to determine, per individual employee, the cost of their putting off retirement based on salary and healthcare costs, including wage and health inflation. We can show you the potential savings to your company if you can help your workforce retire ahead of schedule and conversely, what the additional costs may be if your people stay on past normal retirement age. In essence, there is finally a way to put a dollar figure to a cost that we all know exists, but didn’t know how to quantify!
Once you are armed with the knowledge of what the inability to retire for the average American means to you and your company, the next step is take action. It should be pointed out that simply offering a retirement plan makes a pretty significant difference in retirement confidence as shown in the chart below.
However, offering a vanilla plan may not be enough. We can assist you in reviewing current plan provisions to determine if plan design changes could have a positive impact on your employees’ retirement readiness. Additionally, our education specialist, Caleb Bagwell, can meet with you to determine how a comprehensive education approach that includes one-on-one meetings, group sessions, and web-based communications will help move the needle.
We all know there’s a real retirement problem, so the question is what are you and your company going to do to solve it?
Jamie Kertis, AIF®, QKA
Retirement Plan Specialist
Grinkmeyer Leonard Financial
1950 Stonegate Drive / Suite 275 /Birmingham, AL 35242
Office: 205.970.9088 / Toll-Free: 866.695.5162