1. How Employers can help Millennials, Gen- Xers and Baby Boomers Save for Retirement:
Greg Wojak
M.Sc., CRPS®
Gail Waytena
LPL Financial
Member FINRA/SIPC

2. How Employers can help Millennials, Gen- Xers and Baby Boomers Save for Retirement:

3. 10 Strategies

4. List of 10 Strategies:
Recognize that debt management and retirement savings go hand in hand.
Equip employees with basic retirement plan information.
Focus on key concepts to improve employees’ overall financial literacy.
Tailor financial information and educational programs in an effort to meet the specific needs of employees.
Offer an employer match.
READ THE SLIDE

5. List of the Top 10 Best Practices:
Use automatic enrollment, and set the default savings level to the employer match rate.
Escalate the default savings level over time.
Provide sound financial information and counseling to employees.
Educate Employees about investment risk.
Regularly remind employees of the value of their retirement plan.
READ THE SLIDE

6. 1) Recognize that debt management and retirement savings go hand in hand.
A possible reason some employees don’t contribution enough to their retirement plans is because they spend most of what they earn.
They have no savings with which to fund their retirement accounts.
Consider offering employer education on how to manage living expenses and debt to create savings.

7. 1) Recognize that debt management and retirement savings go hand in hand.
Example:
Question: Is it always better to pay off debt before
contributing to savings?
Answer: Not necessarily.
High interest debt may take precedence over savings.
Contributions to the retirement plan may be more financially beneficial than paying off long-term, low-interest debt.

8. 2) Equip employees with basic retirement plan information.
A possible reason employees have a low plan participation rate is that they lack basic plan information.
Offer basic employer plan information to employees.
Explain:
Type of plan
How it works
Plan features
Investment choices
Decisions the employees need to make, and by when
Plan offerings should be explained by the employer and the retirement plan sponsor programs on a regular basis.

9. 3) Focus on key concepts to improve employees’ overall financial literacy.
Employees that have low overall financial literacy may:
Make poor financial decisions.
Misjudge when to start saving for retirement
Don’t know how much to save.
Sponsor Financial Education designed to:
Improve working knowledge of fundamental financial and economic concepts.
Review the basics of retirement plan benefits.
Calculate how much they need to save for retirement.

10. 4) Tailor financial information and educational programs in an effort to meet the needs of employees.
Financial literacy programs that are not tailored to fit the needs of a targeted group may be counter productive by potentially discouraging workers from saving.
Customize financial education.
Be relevant to someone of the age, gender, or career stage you are training.

11. 4) Tailor financial information and educational programs in an effort to meet the needs of employees.
When customizing an educational program for a particular group of employees, provide information that is relevant to this group.
Example:
Since:
Women demonstrate a lower financial literacy than men.
Younger people have lower levels than older people.
Non-plan participants have a lower level than plan participants
Start their education with more basic information before ramping up to a higher level. .

12. 5) Offer an employer match.
Employers with no company match may have lower plan participation rates.
Offer an employer match, which may increase participation rates. Consider the following:
Requiring shorter tenure
Providing a larger match
Providing comprehensive information on key parameters of the plan
Providing information about the plan program on a regular basis

13. 6) Use automatic enrollment, and set the default savings level to the employer match rate.
Low overall plan participation rate amongst the general employee population.
Automatic enrollment may immediately increase the participation rates of all employees. Consider:
Setting the default enrollment rate to at least the employer match rate
Informing employees if the default level is likely to result in sufficient income in retirement
Notify them about when and how they can make changes to their contribution rate.

14. 7) Escalate the default savings level over time.
Auto enrollment rates may be too low for employees to maximize their savings and reach retirement.
Implement automatic escalation
May increase plan participation, and help employees accumulate a sizeable nest egg.

15. 8) Provide sound financial information and counseling to employees.
Plan participation may be fiscally unwise if it the employee has to borrow to meet daily living expenses.
Provide appropriate financial information and counseling to help workers understand the value of retirement contributions in relation to other needs and savings motives.
Consider providing counseling on:
Interest rates on credit cards, student loans, and other debts.
The importance of a cash reserve for protection against financial shock.

16. 9) Educate employees about investment risk.
Employees may not understand investment risk.
They could make poor investment choices.
This could cost them in the long run.
Employees may benefit from understanding risk management.

17. 10) Regularly remind employees of the value of the company retirement plan.
Some employees could have a tendency to make saving for retirement a low priority.
Provide all employees with regular and timely reminders of the value of contributing to the company retirement plan.
Suggested times:
at annual reviews
following a promotion
at match eligibility
upon being vested in other pension plans

18. Age Specific Issues
Different age groups with different retirement savings issues Millennials Gen-Xer’s Baby Boomers

19. Millennials
A low rate of participation in company retirement plans may be a result of: 1) High debt 2) Low financial literacy 3) Lack of Knowledge of the company retirement plan

20. Millennials
1) Debt Impediment to retirement savings may be debt – especially student loans. Consider education centered on debt management Specifically: create and follow a budget. Employers who help Millennials manage their current debt may enhance their ability to make contributions to retirement plans in the future.

21. Millennials 2) Financial literacy:
Use materials tailored to Millennials.
Stress early plan participation
Provide digital and web-based resources that appeal to Millennials.
Consider providing socially/environmentally responsible investments.

22. Millennials 3) Provide knowledge of the company retirement plan:
Start with the basics
Clearly and succinctly explain the plan fundamentals.
Stress the employer match.
Provide specific steps to follow to enroll in retirement plans.

23. Millennials Describe the chart
Mention that it’s from the wall street journal, which is notated at the bottom of the slide.
This is a hypothetical example and is not representative of any specific investment. Your results may vary

24. Gen-Xer’s
Gen-Xer’s are midway through their working lives. They have fewer income limitations, but are often preoccupied with other financial issues. Gen-Xer’s may not be serious about their retirement savings, and may not be maximizing or optimizing their savings contributions.

25. Gen-Xer’s
1) If they are not serious about their retirement savings, they may:
Need to be reminded that retirement is not too far off.
Benefit from financial planning that takes into account long-term goals.

26. Gen-Xer’s
2) If they are not maximizing or optimizing their retirement plan contributions, they should consider:
Increasing their contribution levels as they advance in their careers.
Developing a plan to achieve higher savings contributions in a manageable way.
Using the completion of payment obligations as an opportunity to transition more money into savings.

27. Baby Boomers
Baby Boomers are fast approaching retirement or are already there. They will have a short time take any needed actions. Issues – they may : 1) Have a lack of retirement savings. 2) Be unprepared for retirement. 3) Be unsure how to transition from wealth accumulation to retirement distributions.

28. Baby Boomers 1) Lack of retirement savings:
Start a “crash” savings plan.
Downsize current lifestyle.
Create a sustainable budget.
Consider liquidating assets to provide additional retirement income.

29. Baby Boomers 2) Unprepared for retirement:
Develop a complete financial plan.
Start retirement planning at least 10 years before retirement.
Build in a cushion for unexpected events.
Have a contingency plan in case of early retirement.

30. Baby Boomers
3) Unsure how to transition from wealth accumulation to retirement distributions:
Calculate a potential income stream from retirement savings.
Create a retirement “paycheck”.
Don’t count on inheritance to save you.

31. Implementation Notes
Increasing plan participation requires marketing. Try to encourage more employees to “buy into” the company retirement plan.
Stress what participation in the plan can do for them.
Get feedback – then update your campaign.
Time and effort will be needed on your part.
Immediate results are great but – think long term.
Consider the following resources:
Your Employer
Your Plan Sponsor
Online Technology
Independent Financial Advisors

32. SUMMARY
We have presented ten best practices that employers can use to help employees save for retirement.
Although the practices apply to everyone, they must be tailored to the individual groups within the company to maximize their effectiveness.
Millennials, Gen Xer’s and Baby Boomers have different financial issues and learn the material differently.
Despite these differences there are a great many effective methods that employers can use to increase employee retirement plan participation.

33. The End
Thank you