PLANADVISER - March/April 2018 - 18

trendspotting
Getting a
Handle on
Retirement
Readiness
Most firms don't know
how well-prepared-or
not-their workers are
ONE of the most important things a
company can do to ensure its wellbeing
is
to
assess
the
retirement
readiness of each of its employees, not
just those who are approaching retirement,
according to Sibson Consulting
in " Quantifying Retirement Readiness, "
a recent Sibson Ideas study.
" Quantifying
retirement
readiness
involves understanding what
savings employees will need [in order]
to attain a secure retirement, gathering
relevant financial and other data
on all employees and then running
the numbers to determine how each
employee stacks up, " says Doron Scharf,
senior vice president with the firm.
Sibson
suggests
TALKING POINT
Focused on Retirement
Workers with access to an employersponsored
retirement plan were more apt
to report (41%) that, in the previous two
years, they had tried to figure out how
much retirement income they would need,
compared with those without access (16%).
Source: The Pew Charitable Trusts
18 | planadviser.com march-april 2018
Art by Sarah Mazzetti
that
three metrics:
replacement
ratio,
wealth accumulation target and retirement
readiness grade.
The replacement ratio is the required
employers
consider one or more of the following
income for retirement as a percentage
of income just before retirement. Citing
a 2016 Government Accountability
Office (GAO) study, Sibson says the
replacement ratio should fall between
70% and 85% and include Social Security.
The firm notes that, while 65 is the
typical retirement age, some employees
will retire earlier, and they will need
additional savings to cover a longer
time post-employment.
The wealth accumulation target is
the total savings an employee will need
to sustain him through his retirement.
Sibson says one study has shown that if
a person were to retire at 65 and want
to replace 85% of his income, he would
need 11 times his final pay. At age 67, he
would need only eight times final pay.
The retirement readiness grade is a
letter grade given to each employee to
show his progress.
" Once these metrics are set up,
employers should develop and implement
strategies to help their employees
stay on track, " says Jonathan Price, vice
president at Sibson. " Strategies could
include plan design changes, educational
materials, or communications
campaigns to encourage behavioral
changes. " As Sibson's report notes,
" Many organizations have no idea how
financially prepared their employees
are for retirement. They may have a
number of employees who have to work
for many more years. " -Lee Barney

http://www.planadviser.com

PLANADVISER - March/April 2018

Table of Contents for the Digital Edition of PLANADVISER - March/April 2018

2018 PLANSPONSOR Retirement Plan Adviser of the Year
Battling the Elements
Taking on Discretion
A QDIA In Transition
Working Down-Market
Retirement Income Options
2018 SEC Examination Priorities
Enforcement of the DOL Rule
Duty to Investigate
PLANADVISER - March/April 2018 - C1
PLANADVISER - March/April 2018 - FC1
PLANADVISER - March/April 2018 - FC2
PLANADVISER - March/April 2018 - C2
PLANADVISER - March/April 2018 - 1
PLANADVISER - March/April 2018 - 2
PLANADVISER - March/April 2018 - 3
PLANADVISER - March/April 2018 - 4
PLANADVISER - March/April 2018 - 5
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PLANADVISER - March/April 2018 - 18
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PLANADVISER - March/April 2018 - 21
PLANADVISER - March/April 2018 - 22
PLANADVISER - March/April 2018 - 23
PLANADVISER - March/April 2018 - 2018 PLANSPONSOR Retirement Plan Adviser of the Year
PLANADVISER - March/April 2018 - 25
PLANADVISER - March/April 2018 - 26
PLANADVISER - March/April 2018 - 27
PLANADVISER - March/April 2018 - 28
PLANADVISER - March/April 2018 - 29
PLANADVISER - March/April 2018 - 30
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PLANADVISER - March/April 2018 - 35
PLANADVISER - March/April 2018 - 36
PLANADVISER - March/April 2018 - 37
PLANADVISER - March/April 2018 - 38
PLANADVISER - March/April 2018 - 39
PLANADVISER - March/April 2018 - Battling the Elements
PLANADVISER - March/April 2018 - 41
PLANADVISER - March/April 2018 - 42
PLANADVISER - March/April 2018 - 43
PLANADVISER - March/April 2018 - Taking on Discretion
PLANADVISER - March/April 2018 - 45
PLANADVISER - March/April 2018 - 46
PLANADVISER - March/April 2018 - 47
PLANADVISER - March/April 2018 - A QDIA In Transition
PLANADVISER - March/April 2018 - 49
PLANADVISER - March/April 2018 - Working Down-Market
PLANADVISER - March/April 2018 - 51
PLANADVISER - March/April 2018 - Retirement Income Options
PLANADVISER - March/April 2018 - 53
PLANADVISER - March/April 2018 - 2018 SEC Examination Priorities
PLANADVISER - March/April 2018 - Enforcement of the DOL Rule
PLANADVISER - March/April 2018 - Duty to Investigate
PLANADVISER - March/April 2018 - C3
PLANADVISER - March/April 2018 - C4
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