Plan Sponsor

A recent survey from market intelligence firm Cerulli Associates highlights a striking disparity in the financial wellness space. According to the report, U.S. Retirement End-Investor 2024, more than 90% of defined contribution recordkeepers provide financial wellness services and 71% of plan sponsors have adopted such programs. Yet at the same time actual engagement remains low, with usage rates for most resources below 20%. And while 41% of participants find their financial wellness resources “very helpful,” a majority (57%) express neutral sentiments.

A troubling trend has emerged in the retirement planning space: The “magic number” — or amount of money Americans believe they need to retire comfortably — has surged to an all-time high, even as actual retirement savings have declined. This growing disparity or “magic number gap,” highlights a significant and escalating challenge for both participants and plan sponsors. Northwestern Mutual’s 2024 Planning & Progress Study reveals that U.S. adults now believe they will need $1.46 million to retire comfortably, a 15% increase from the previous year’s target of $1.27 million and a jump that far exceeds the current rate of inflation.

A recent study commissioned by the ALI Retirement Income Institute has revealed a stark reality: A substantial portion of America’s Baby Boomer population is ill-prepared for retirement. As the retirement countdown begins for Peak Boomers, plan sponsors have an opportunity to implement impactful strategies that can help increase the financial security of employees entering their golden years.

A recent Gallup survey found that engagement at work has cratered among U.S. employees, with only 33% of workers were engaged in 2023. With engagement on the decline, that can mean decreased productivity, higher turnover, lower profitability, and a host of other problems for the organization. With this in mind, the company’s retirement plan can be leveraged as a powerful tool to help increase engagement and combat many of the negative sentiments among today’s workers.

Effective retirement plan communications do more than just meet DOL requirements; the best ones engage, educate, motivate, and empower participants. Optimize your communications to connect with employees on a personal level, encourage informed decisions, and foster more active engagement with their retirement plan and their financial future. Effective, empathic communications help build a foundation of trust and confidence in the plan benefits — and the employer.

Target date funds (TDF) are in high demand these days. According to a recent Sway Research study, total TDF assets reached $3.5 trillion in 2023 — a record level. Moreover, mutual fund target dates began 2024 slightly ahead of collective investment trusts, holding $1.76 trillion in assets compared to $1.71 trillion in CITs, TDF assets in CITs are expected to overtake assets in mutual funds this year as fiduciaries continue to look for ways to reduce fees and access innovative solutions.