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RETIREMENT CONSULTING INSIGHTS

Category: Retirement Consulting


FAST-FORWARD TO A FINANCIALLY SECURE WORKFORCE

JUNE 7, 2022

Two years of economic uncertainty caused by the COVID-19 pandemic have been
followed by inflation and rising prices for products and services. As a result,
many people are struggling to save for retirement when faced with the more
pressing priorities of paying for basic living expenses.

If your organization isn’t concerned, it should be. When employees struggle
financially or don’t plan for the future, it can negatively impact your
organization’s bottom line. Research shows that workers who are financially
stressed are not fully focused on their duties and are more apt to have higher
healthcare claims, absenteeism, reduced productivity and delayed retirement.

Employees who fail to retire at the expected age may remain on your payroll for
several more years. Research conducted by Prudential in 2019 shows that for each
year an employee delays retirement, the cost to an employer can be more than
$50,000 per employee due to increased healthcare costs, lower productivity and
higher salaries. For a company with 500 employees, the estimated cost is $2.25
million if only 15 workers delay retirement for three years.


ECONOMIC STRUGGLES IMPACT RETIREMENT READINESS

For workers who are 18 to 35 years old, postponing participation in a 401(k) or
403(b) savings plan may be a knee-jerk reaction to meeting the demands of
monthly housing payments, student loans, transportation costs or daily living
expenses. While younger workers may understand the need to save long-term, they
may prioritize other immediate needs such as achieving short-term savings for
emergencies.

Millennials and Gen Xers are the most insecure about their ability to cover
monthly housing costs (rents/mortgages), so setting aside money for retirement
is challenging for them.1 The youngest workers (Gen Z) are also hesitating to
save for the future.

 




 

Employees who are closer to retirement also worry about rising prices, wondering
if they’ve saved enough and if they’ll have to retire later than planned. Of Gen
Xers who say the pandemic has negatively affected their retirement plans, nearly
30% state they are completely off track or will need four to five years to
rebound.2

Unfortunately, these situations impact organizations of all sizes and in all
industries. A 2020 survey by the Society for Human Resource Management revealed
that 80% of employers said financial stress reduced employee performance —
costing nearly $500 billion annually. In addition, the long-term effect of
financial insecurity and retirement readiness can be extremely costly to
employers.


ADVANTAGES OF A CUSTOM-FIT RECORDKEEPER

All employees in your workforce need to improve their financial security and
become retirement ready. Your plan’s recordkeeper is key to helping your
employees improve their financial security. Identifying an appropriate record
keeper can be achieved with a retirement plan consultant dedicated to
proactively meeting your plan’s needs.

The experts at USI Consulting Group (USICG) routinely conduct recordkeeper
provider searches, aiming to match clients to an ideal recordkeeping solution to
enhance the wellbeing of plan participants.



> Case Study: Proactive Recordkeeper Improves Plan Participation and
> Contributions
> 
> 
> A client recently engaged USICG to conduct a request for proposal (RFP) to
> change its 401(k) plan recordkeeper. The primary goal was to find a reputable
> recordkeeper that could meet the client’s needs with regards to employee
> education support, with priority on obtaining enhanced technology for
> employees’ retirement and financial wellness needs.
> 
> Through USICG’s customized RFP process and resources, we identified the right
> recordkeeper for the client’s plan and employees. By coupling the
> recordkeeper’s strong financial wellness tools and resources with USICG’s
> experienced team, the client implemented several plan design changes that
> enhanced the well-being of its plan’s participants. Plan participation
> increased to 98.5% from 61%, and the average deferral rate increased to 8.45%
> from 4.8%.


Consider your current recordkeeper’s services. Do they no longer meet the
current plan structure? Do they fail to maximize current and future fee
reduction opportunities —  which may be negatively impacting your plan
participants’ returns? Do they meet the need to educate and engage your
employees to be more financially secure?


HELPING EMPLOYEES OBTAIN SECURITY

Organizations have an opportunity to help employees acquire skills to improve
income security and achieve the financial freedom to retire. The cost for an
employer to not provide this guidance is too high. Our recent article, Employees
Need Your Help to Achieve Retirement Readiness, highlights strategies to better
prepare your employees for retirement and help offset the financial impact of
delayed retirement to your organization.


A TRUSTED PARTNER FOR YOUR RECORDKEEPER SEARCH

USICG has been helping employers enable their workforces to successfully plan
and invest for retirement for over 45 years. Our specialized team evaluates the
various recordkeeper options available to analytically determine the best
customized fit for your organization’s retirement plan, and implements the best
financial wellness program to improve participation and increase deferral rates.

To learn more about USICG’s solutions and how we can help you improve your
employees’ financial security and retirement readiness, contact your local USICG
representative, visit our Contact Us page, or reach out to us directly at
information@usicg.com.



1 Morning Consult’s U.S. Consumer Spending Report (April 2022)
2 Fidelity Investments’ 2022 State of Retirement Planning Study

This information is provided solely for educational purposes and is not to be
construed as investment, legal or tax advice. Prior to acting on this
information, we recommend that you seek independent advice specific to your
situation from a qualified investment/legal/tax professional.

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