NEPC’s Emma O’Brien was quoted in a recent PlanSponsor article to discuss how plan sponsors can help ‘demystify’ the overall process for participants. View the article on PlanSponsor’s site here.
A new education push is underway among plan sponsors, who are looking to help employees create income in retirement when their last day of work precedes eligibility for Medicare and Social Security benefits.
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Starting conversations about these topics early is key to overcoming inertia and to demystifying the process, according to Emma O’Brien, a senior consultant with NEPC who is based in the Boston area. A consultant to plan sponsors, she sees greater success in easing stress among employees when plan sponsors engage their participants long before they have a retirement date in mind. Varied direct messaging is essential too, as she recommends multiple attempts to reach employees, whether by email or by mail.
“It starts with making sure that the plan is simple and clear to participants so that when they do engage, they don’t get overwhelmed,” O’Brien says.
Finding ways to encourage employees to boost savings is a necessary complement to getting employees involved with their retirement plans, she says.
“The more participants contribute as active employees, the more options they have for spending down their benefits in retirement, both in terms of the dollar amounts they can draw, as well as the different distribution strategies,” O’Brien says.
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She also sees benefits in providing modeling, such as when recordkeepers provide tools within their websites to help participants forecast their potential savings at retirement. Some include the ability to incorporate Social Security benefits as well, O’Brien says. Gaming out different options can quickly show pros and cons.
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O’Brien too, sees how employees are aided by testing various scenarios. “They can model out what their future Social Security benefit is, and that’s the way to get a much more personalized approach,” she says.
She also encourages plan sponsors to reframe how they discuss Social Security with plan participants.
“We’re changing the way we think about Social Security, which is essentially an annuity,” O’Brien says. “Providing participants with information and tools to understand what their income replacement can be in retirement through their DC savings and Social Security benefits is really useful education.”
Read the full article on Plan Sponsor’s website here.