The national spotlight shines on the private retirement savings system this month, during National Save for Retirement Week. This weeklong initiative is an opportunity for the industry to reflect and reminds insurance companies — who capitalize on their risk management expertise to provide Americans with compelling retirement solutions — of their duty to preserve a system that has worked for so long and provided for so many.
Although the national conversation often focuses on the perceived shortcomings of the system, the fact remains that the primary, and often the only, way Americans save for retirement is through their employer-sponsored retirement plan.
Our industry must affirm its commitment to helping Americans reach better retirement outcomes through collaboration and innovation. We simply have to work with legislators, regulators and other industry leaders to simplify — not complicate —the system and make it easier for people to succeed.
Helping today’s savers think about retirement in a more positive way will reinforce their confidence in achieving personal retirement savings goals. The tax advantages afforded by saving in a retirement plan are a key advantage for savers. Roth IRA investment options also give participants the choice of paying taxes on contributions now instead of when they retire. Imposing limits on tax-advantaged savings creates barriers, adds complexity and promotes a false notion that a certain amount of savings is sufficient.
Additional support for savers comes through enhancements to plan education and communication. Addressing the needs of a diverse workforce and encouraging participants to accumulate enough assets to take them not only to but also through their retirement years are essential tools in a plan sponsor’s offering. Education, including one-on-one communication, is a primary way to help participants stay on track through all life stages.
Simplify the Process
Since 2006, doors have opened for innovations in plan design, including automatic plan features. In recent years, providers and sponsors have pioneered innovations such as automatic enrollment, deferral and escalation to streamline the savings process and enhance retirement outcomes for plan participants. The combination of simplified plan design and outcomes-focused, action-oriented communication has the power to make retirement planning and saving more meaningful and tangible.