A football coach doesn’t just tell players there’s a game and expect them to do all things right and win; the coach helps players improve their skills, plan their moves and review their performance.
In the same way, retirement plan sponsors can act as retirement coaches for employees.
“When we say retirement coach, we don’t envision plan sponsors sitting down giving one-on-one advice,” says Cathy McCabe, senior managing director for the Institutional Business division at TIAA in New York City. “Coaching includes offering communication, education and the opportunity for advice to help employees take an active role in retirement planning.”
This is something really important to plan sponsors that are really advocates and partners trying to increase plan participation and make sure employees are taking advantage of the education offered to them, she adds.
Plan sponsors should start coaching employees at an early age, helping them understand why it is so important to save for their future, McCabe suggests. They should make sure employees are not missing out on saving early, increasing savings over time and not missing out on the employer match.
She notes that TIAA’s Voices of Experience survey revealed that those who began retirement planning before the age of 30 are more likely to retire before the age of 60, and 75% of those early planners were satisfied with their retirement.
Plan sponsors should offer employees the right set of tools to implement an effective retirement savings plan. “TIAA partners with plan sponsors so that, throughout their career, employees are offered education and have an opportunity for one-on-one advice either by phone or in person,” McCabe says.NEXT: Coaching for the transition to retirement
As employees start to think about retirement, they need a plan for drawing down their savings. This takes a combination of educational seminars and sending folks to advisers, according to McCabe. Whether using self-serving calculators or tools or sitting down with an adviser to talk about goals and their financial situation, those nearing retirement need to understand what their fixed expenses will be, how to pay for health care, and how to pass assets on to heirs, she adds.
There’s also an emotional component to preparing for retirement, McCabe notes. “Even if employees are ready for retirement financially, they may not be ready to lose their ‘identity,’” she says. She suggests plan sponsors tap into seminars that address the psychological issues of retiring. In addition, a phased retirement, or gradual transition may help. For example, she says, for professors, offering the opportunity to teach one night class may help them transition into full retirement.
Throughout employees’ careers, plan sponsors should balance financial education with offering access to financial professionals. In addition, McCabe says, TIAA has found that allowing employees to include their spouses or partners in educational and advice offerings has a positive impact.“I think the best results I see for plan sponsors is when they are a partner and advocate and want to help employee learn and take action. Employee response is much better than plan sponsors anticipate,” McCabe concludes.