What is success in retirement planning?
That question has two parts:
- What is the bar for success?
- Can you measure and track success?
What we are finding is that enhancements to question number two are driving changes in question number one.
Up until some of the more recent innovations in the retirement plan space, plan sponsors could not really answer either. Today however, data is getting better, which in turn shows us what factors really make a difference in retirement planning success, and which ones are more of a distraction.
A recent infographic from Vanguard shows several of the key data points being evaluated today, including plan design features that increase participation, deferral rates and proper investment allocations. All totaled, this is helping to reshape the landscape, first at the employer level, and then subsequently moving out to the participant level.
For instance, with target date funds gaining in popularity at a rapid rate, we know that plan sponsors are more apt to adopt them. A separate result is that plan participants will become more aware of them, as they will see them at multiple employers.
With regards to the two-factor approach to success, we are finding that data tracking impacts the definition of success as pushed by the ability to capitalize on research to reveal ever better retirement planning methods. Success is being redefined as our ability to measure it continues to evolve.
Cheers to better data innovation leading to better retirement outcomes.
Editor’s Note: The essay first appeared in BCI Group blog.
Nick Kralj is the director of retirement at BCI Group, Inc. where he works with clients as a trusted partner to help shape retirement plans and investment solutions that benefit both businesses and employees.
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