Three strategies to help drive better financial planning outcomes

TIAA sheds light on ways plan sponsors can help employees work toward a financially secure future
New York (Dec. 7, 2016) – Americans face many questions as they work toward financial security: How do they get started on the right path? What is the best way to balance saving for retirement with paying for education and other priorities? How can they get guaranteed income for life?
Fortunately, there are a lot of resources for individuals at every life stage who are looking for ways to prepare for their financial future. Plan sponsors can help often overwhelmed employees access the right support, tools and strategies to set up a solid financial plan and help drive successful retirement outcomes.
TIAA conducted a series of surveys this year to better understand the support that Americans want and need in their planning. Three key insights emerged that can help plan sponsors guide employees on the path toward achieving it:

1. Educate Employees on Income for Life

There are significant disconnects between Americans’ attitudes and behavior when it comes to guaranteed monthly income for life in retirement. People want lifetime income options—in fact, almost half (49 percent) say that their retirement plan’s No. 1 goal should be providing guaranteed monthly income in retirement—but 41 percent are unsure if their current plan has that as an option.1 Plan sponsors are in a unique position to ensure that employees have access to and understand their options for the provision of lifetime income. 

In particular, plan sponsors can help their employees be realistic about how much income they will need in retirement. Sixty-three percent of Americans who are not retired estimate they will need less than 75 percent of their current income to live comfortably.2 However, most experts recommend replacing 70 to 100 percent of current income in retirement.
“It is vital for employees to estimate how much money they’ll need in order to live comfortably in retirement and take advantage of the tools that help identify how they can secure a stream of income they can’t outlive,” said Ron Pressman, CEO of Institutional Financial Services at TIAA. “Having a source of guaranteed income can help savers be better prepared to deal with ongoing retirement expenses, such as healthcare, as well as unexpected events.”
Lifetime income options such as annuities are one way to guarantee income replacement each month in retirement, but a knowledge gap exists for these types of investments. Only one in 10 Americans has an annuity, but the more people know about annuities, the more favorable their impressions.3 In fact, almost all (92 percent) of TIAA retirees surveyed who have an annuity are satisfied with their investment decision.4

2. Urge Employees To Tap Financial Advice

People benefit from professional financial advice: 61 percent of those who have received advice feel confident about their financial situation, compared to 37 percent of people who haven’t. But many do not realize it’s within reach: 35 percent of Americans who have not worked with a professional financial advisor say they don’t think they have enough money to justify a meeting.5 Even more—49 percent—believe they need more than $50,000 in savings to justify meeting with an advisor.6
Employers can play a key role in helping employees get access to financial advice. It’s clearly a benefit that many employees would value, because three in four Americans surveyed say they would be more likely to consider a job if it offered financial advice at no additional cost as part of a benefits package. That figure increases to 87 percent among Gen Yers.7 In fact, the prospect of financial advice at no additional cost was the most popular among various free perks an employer could offer–more popular than on-site medical care or free lunch prepared by an on-site chef.8
“Regardless of where they are in their professional lives or retirement goals, there is a wide spectrum of support available to help employees with financial planning,” said Pressman. “In addition to resources in the workplace, plan sponsors can work with retirement providers to offer other means to access advice when and where it’s convenient, such as one-on-one meetings, webinars, podcasts, and online tools and calculators. Perhaps most importantly, plan sponsors can communicate frequently with employees to ensure they know what’s available—and retirement providers that can help.”

3. Play a Key Role in Planning Ahead

Getting an early start on retirement planning can make a big difference: Among today’s TIAA retirees, those who began preparing before age 30 were more likely to retire before age 60.9 The majority (97 percent) of those early planners who were surveyed say they are satisfied with their retirement.10

Employers can play a key role in helping their employees achieve satisfaction by introducing resources for all stages of the financial planning process. Customizable planning tools such as the Preparing for Retirement experience and tailored support based on employees’ life stages can help employers get their employees in a retirement frame of mind, regardless of an employee’s life stage. These tools can make it easier for employees to evaluate their personal risk tolerance, asset allocation, and the current status of Social Security and Medicare to help them better envision their future retirement and the steps they can take to set themselves up for success.
“The transition from working to retired life can be a significant adjustment for people, but careful preparation can help alleviate anxieties and boost financial confidence for employees,” Pressman said. “Employers can provide access to the tools and resources at work, but also encourage employees to create a shared vision with their loved ones about how retired life may be for them and their families.”
TIAA found that a significant portion (75 percent) of retirees reported spending most of their time pursuing personal interests or hobbies while alone, which can be a significant emotional transition from the crowded workplace or campus setting.11 It can be beneficial for employees to talk about how they plan to spend their time in retirement, as well as interest in travel and charitable donations, with their partners or spouses beforehand to manage expectations for when they enter retirement. This collaborative approach has proven outcomes: 85 percent of TIAA participants surveyed who reported an easy transition into retirement said they shared a vision with their partner.12

Putting It All Together

While many employers are committed to helping employees achieve their retirement goals with features like financial education and lifetime income options on the retirement plan’s investment menu, employees may not realize they could be using these benefits.

“Encouraging employees to explore and leverage the full range of benefits their plan offers while they are working can help lead to better outcomes when it’s time to retire,” said Pressman. “Year-end is the perfect time to help employees get reacquainted with plan features and make sure they are using them to their advantage in the new year.”
Read on for ways plan sponsors can help employees understand about the importance of personal support and lifetime income.

About TIAA

TIAA ( is a unique financial partner. With an award-winning13 track record for consistent investment performance, TIAA is the leading provider of financial services in the academic, research, medical, cultural and government fields. TIAA has $915 billion in assets under management14 (as of 9/30/2016) and offers a wide range of financial solutions, including investing, banking, advice and guidance, and retirement services.

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Leslie Sepuka
13 The Thomson Reuters Lipper Large Fund Award is given to the group with the lowest average decile ranking of three years’ Consistent Return for eligible funds over the three-year period ended 11/30/12, 11/30/13, 11/30/14 and 11/30/15, respectively. TIAA was ranked among 36 fund companies in 2012, 48 fund companies in 2013 and 2014, and 37 fund companies in 2015 with at least five equity, five bond or three mixed-asset portfolios. Classification averages are calculated with all eligible share classes for each eligible classification. The calculation periods extend over 36, 60 and 120 months. The highest Lipper Leader for Consistent Return (Effective Return) value within each eligible classification determines the fund classification winner over three, five or 10 years. A detailed awards methodology can be found at . For current performance and rankings, please visit the Research and Performance section on Past performance does not guarantee future results.
14 Based on assets under management across Nuveen Investments affiliates and TIAA investment management teams

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