Tips to Make Retirement Education Meaningful

August 19, 2014 ( - "Education is the most powerful weapon which you can use to change the world."- Nelson Mandela

At 54 years of age, James has been working for the same company since the day he graduated high school and, as a blue collar aworker, his financial education has been limited. What little education he has received over that time period has come from his employer, and he’s recently become increasingly aware of the fact he’s rapidly nearing retirement. Like most American’s his age, he has $9,000 in credit card debt, a mortgage, two kids, he’s living paycheck to paycheck, and he has very little saved in an emergency fund. Thankfully, his employer encouraged him to defer 3% of his salary into its 401(k) plan and it has matched his deferrals dollar-for-dollar for quite some time. But despite that, James is asking himself, “will retirement even become a reality for me?” and “how do I know if I have enough to retire?”  

Given the fact that most Americans are underfunded for retirement, the cold, hard truth is retirement will actually remain a pipe dream for most people. It’s as if we’re watching a race that will never have a finish line. The question is: Can you, the plan sponsor, change this scenario?  

When planning an employee financial or retirement education event, you may not think you have the power to change the world. We would argue, however, that a meaningful education strategy can be the first step in changing your workforce’s financial future; in turn, changing their world.  

So what can plan sponsors do to make education more meaningful? 

1.       Paint a Picture of Their “Future Self” – We find that one of the reasons employees are hesitant to save for the future is they do not recognize their future selves. Today, we identify with wanting a latte, a new car or a nicer home but we cannot identify with the wants and needs we may have at 67 years of age. One strategy for embracing your future self is to have your employees envision, not only their financial retirement goals, but also lifestyle retirement goals. For instance, do they want to buy an RV and travel the country, volunteer with a local organization, move to the city or country of their dreams, or are they simply looking to settle down and tend their garden? By forcing today’s self to recognize how he or she will look in the future, employees are more likely to save for that future. 

2.     Help Them Plan for an Achievable Number – A goal without a plan is just a wish. Case in point, the 2013 BlackRock Annual Retirement Survey shed light on this very fact by uncovering that 45% of respondents said they were not saving enough because they did not know how much they would need, while 77% of respondents said they would increase their savings effort if they knew how much they would need to save now in order to achieve a per dollar goal of income replacement needed in retirement. For too long the financial services industry has focused on the daunting pot of money people should accumulate in order to retire. “You need $2 million in savings in order to make it work” is an excellent statement for turning people off! These numbers are unachievable for most people. However, replace the $2 million figure with a goal of $3,800 per month in retirement income and people envision an attainable dream. Thankfully, many retirement plan vendors now offer tools that allow participants to model their future income streams so they can visualize how much they will have based on their current savings rates. The best tools even offer solutions for closing any income gaps they may have through increased savings, investment allocation changes, and other alternatives.

3.       Account for Health Care - A 2013 study conducted by Fidelity's Jamesefit Consulting group estimated that the out-of-pocket health care expenses for a 65-year-old couple with no employer-provided retiree health care will be $220,000 assuming a life expectancy of 17 years for the man and 20 years for the woman. Fidelity also found that people may underestimate these costs by more than 50% and, amazingly, 48% of pre-retirees ages 55 to 64 thought they would only need $50,000 for health care expenses in retirement! Part of the problem contributing to this blatant misconception is the lack of education surrounding employer sponsored health care plans, Medicaid, Medicare and out-of-pocket medical expenses. As part of a comprehensive financial education plan, it is imperative that medical and insurance costs be incorporated into the retirement planning discussion.

4.       Start 'Em Young - Albert Einstein called compound interest "the greatest mathematical discovery of all time" and the power of compounding interest is certainly evident in retirement plan balances.  The Department of Labor issued the "Top 10 Ways to Prepare for Retirement" and illustrated that $5,000 in annual savings with 7% annual growth would equate to $316,245 in 25 years. By saving the same amount for a period of 35 years, the balance would equal $691,184—more than double the next egg for a sacrifice of 10 more years in savings. In other words that is the difference between starting at 30 years old versus age 40.

5.       Keep the Message Relatable - Mention COLA and Gap analysis to the average participant and they might think you are referring to grabbing a soda before heading to a popular clothing retailer. Paramount to the success of any education strategy is using simple terms and relatable examples to illustrate potentially complex issues.  For example, telling a group of participants that inflation will erode the buying power of their dollar over the entirety of their retirement may be lost in translation, but telling that same group of participants that the $5 sandwich they enjoy today will cost $22.93 in 30 years will likely keep their eyes from glazing over. It’s easier for people to understand that, today, $100 will buy you 20 sandwiches but in 30 years that same $100 will buy you less than five and, therefore, they need to save more to combat the loss of buying power they’ll experience.


Employees like James are really no different than you and I. James relates to ideas he understands and he runs from things he fears. By approaching your employee education events a little differently and working toward healthy attitudes about retirement, those dreams can become a reality. In the long-run, this can lead to a culture of more loyal, productive and financially sound employees.


Trent A. Grinkmeyer, CRPC, Valerie R. Leonard, AIF, and Jamie Kertis, QKA, AIF

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Trent Grinkmeyer, Valerie Leonard, and Jamie Kertis are Registered Representatives and Investment Adviser Representatives with/and offer securities and advisory services through Commonwealth Financial Network, Member FINRA/SIPC, a Registered Investment Adviser. Fixed insurance products and services offered through Grinkmeyer Leonard Financial or CES Insurance Agency.  Grinkmeyer Leonard Financial, 1950 Stonegate Drive, Suite 275, Birmingham, AL 35242, (205) 970-9088.   

This feature is to provide general information only, does not constitute legal or tax advice, and cannot be used or substituted for legal or tax advice. Any opinions of the authors do not necessarily reflect the stance of Asset International or its affiliates. The persons portrayed in this example are fictional. This material does not constitued a recommendation as to the suitability of any investment for any person or persons having circumstances similar to those portrayed, and a financial adviser should be consulted.