Your employees have hopes and dreams about what their retirements will look like. Right now they are following a retirement planning path they hope will lead to a better way of life when they are no longer working. Unfortunately, there are many stumbling blocks and wrong turns they can experience on their journey.
Recent studies have uncovered some important retiree regrets that you can share with your employees in your 401k education sessions to help make their paths to retirement more successful.
Research from the Transamerica Center for Retirement Studies and HSBC, which was published in PLANSPONSOR magazine, shared the following retiree regrets gathered from existing retirees about what they wish they would have done differently while working:
Saved more consistently
Saving for retirement is hard because the goal is so far away. The vast majority of retirees felt that they should have done a better job saving for their retirements. Only 16% of retirees felt like they had saved enough. Most retirees underestimated how much money they would need in retirement.
Been more knowledgeable
A large majority of retirees wish they would have spent more time educating themselves about saving and investing. There are a myriad of tools and resources employees can use to help construct their ideal retirements. It appears that most felt they didn’t take full advantage of the resources available.
Nearly half of retirees felt they became serious about retirement planning too late in their careers. Starting to save early is a major contributor to achieving retirement readiness.
Obtained more advice
About half of retirees wish they would have received more advice about what to do. Many employees think they don’t need advice on saving and investing. Some believe that the 401k education sessions they are required to attend are a waste of time. Studies indicate that many retirees regret not taking the opportunity to obtain more advice.
Greatest Retiree Misperceptions
Besides retiree regrets, the studies also shared some misperceptions retirees had about retirement. I have included my thoughts on what I have heard from retirees as well.
I can work as long as I want
This is the most common response I hear from participants when I talk with them about falling short in their savings plans. They say, “Bob, I know that I am behind in saving, I will just work longer”. Studies show that nearly two-thirds of retirees retired sooner than they expected. Employees may encounter unexpected health problems, changes in the economy or a diminished demand for their particular skill set, which forces them to stop working. Research shows that employees should not assume they can work as long as they want.
I won’t have to work in retirement
U. S. News reported that nearly 1/3 of Americans age 65 or older were working in 2010. Based upon conversations that I have had with retirees, it is fair to say that a large percentage of these individuals would prefer not to work and weren’t planning on it. They are forced to work at least part-time because they were not able to save enough or work full-time long enough.
I will be debt free
Twice as many retirees are still struggling with debt in retirement than expected to. Most were probably thinking they could pay off their mortgages or credit card debt before they retired. Not being able to achieve freedom from debt is also likely due to not being able to work full-time long enough.
Consider sharing these retiree regrets and misperceptions with your employees during your next employee education session.
Robert C. Lawton, AIF, CRPS is the founder and President of Lawton Retirement Plan Consultants, LLC. Mr. Lawton is an award-winning 401(k) investment adviser with over 30 years of experience. He has consulted with many Fortune 500 companies, including: Aon Hewitt, Apple Inc., AT&T, First Interstate Bank, Florida Power & Light, General Dynamics, Houghton Mifflin Harcourt, IBM, John Deere, Mazda Motor Car Company, Northwestern Mutual, Northern Trust Company, Trek Bikes, Tribune Company, Underwriters Labs and many others. Mr. Lawton may be contacted at (414) 828-4015 or firstname.lastname@example.org.
Lawton Retirement Plan Consultants, LLC is a Milwaukee, Wisconsin-based independent, objective Registered Investment Advisory (RIA) firm providing investment advisory, fiduciary compliance, employee education, vendor management and plan design services to 401(k) plan sponsors. The firm currently has contracts in place to provide consulting services on more than $400 million in plan assets. For more information, please contact Robert C. Lawton at (414) 828-4015 or email@example.com or visit the firm’s website at: https://www.lawtonrpc.com. Lawton Retirement Plan Consultants, LLC is a Wisconsin Registered Investment Adviser.
This information was developed as a general guide to educate plan sponsors and is not intended as authoritative guidance, tax, legal or investment advice. Each plan has unique requirements and you should consult your attorney or tax adviser for guidance on your specific situation. In no way does Lawton Retirement Plan Consultants, LLC assure that, by using the information provided, plan sponsor will be in compliance with ERISA regulations. Investors should carefully consider investment objectives, risks, charges and expenses. The statements in this publication are the opinions and beliefs of the commentator expressed when the commentary was made and are not intended to represent that person’s opinions and beliefs at any other time. The commentary does not necessarily reflect the opinion of Lawton Retirement Plan Consultants, LLC and should not be construed as recommendations or investment advice. Lawton Retirement Plan Consultants, LLC offers no tax, legal or accounting advice and any advice contained herein is not specific to any individual, entity or retirement plan, but rather general in nature and, therefore, should not be relied upon for specific investment situations. Lawton Retirement Plan Consultants, LLC is a Wisconsin Registered Investment Adviser and accepts clients outside of Wisconsin based upon applicable state registration regulations and the “de minimus” exception.