“Prepared for Life” identified several plan features that TIAA-CREF claims help to support retirement readiness:
- Automatic enrollment and escalation. According to the paper, contribution rates need to be at least 4% and increase automatically.
- Updated employer matches. TIAA-CREF advises employers to consider matching 50 cents on the dollar up to 8% or 10% in order to encourage higher contribution rates from employees.
- Annuitization options. TIAA-CREF research suggests retirees annuitize enough of their savings to generate 20% to 30% of their income needs.
- Five to 10 investment options. According to TIAA-CREF research, having too many investment choices can lead to employee indecision, decreased plan participation and increased fiduciary and administrative responsibilities for plan sponsors.
- More guidance. Individuals who receive actionable financial advice are five times more confident in their retirement prospects than the average American worker, TIAA-CREF found.
- Employee education. Personalized, relevant communications and educational tools—available in person, online and over the phone—are critical to employee engagement, according to TIAA-CREF.
- Limited retirement plan borrowing. TIAA-CREF claims loans raise plan costs and negatively affect employee retirement readiness.
The white paper is based on research by the TIAA-CREF Institute and other independent sources, which informed the design of the TIAA-CREF’s new service, Plan Outcome Assessment (see “TIAA-CREF Launches Plan Assessment Service”).
More information is available here.