Are we there yet?

Jul 31, 2018

Before every major milestone or change in life, the question "am I ready?" consistently appears. Whether this applies to starting a family, changing careers, or even picking up a new skill, readiness is a top priority.

This same thought process can be applied to planning for retirement as well.

When discussing retirement, we see three common questions:

  1. Will I have enough money to retire?

  2. Will my savings last through my retirement?

  3. What if something goes wrong?

Even though these questions raise important concerns about the journey to retirement, the one common theme that seems to encompass the scope of each of these concerns is that of retirement readiness.

Many plan participants believe that their readiness to retire is solely dependent on the success of their retirement plan. With certain plan features and changes out of a participant's control, many think they have little impact on their own retirement readiness.

However, this is not the case as an important change to a participant's retirement readiness can be made at the participant level; the contribution rate.

Although this impactful change can be made by a participant, there are still limitations that hinder employee engagement and interaction within the plan. For example, some plan members may lack the technological skills – or motivation – to change their contribution rate online. Even those who are less tech averse may not even be participating in the plan to begin with. With the struggles of balancing everyday life, some of your clients may be entirely focused on today, without also planning for tomorrow.

That is where you come into play.

By encouraging your clients to increase their plan contribution rates, or by nudging them to even participate in the plan, you can help to answer the retirement readiness question for plan participants. A common fear surrounding retirement planning is that increasing contribution rates will drastically change one's take-home pay. However, this may not be the case. Demonstrate to them how a small change in contribution rate would only leave a tiny mark on their paycheck, still leaving room for your clients to pay their bills while also saving for retirement.

Even though some of your clients may be on the right track to their retirement, more than 50% believe they could save more than they currently do1. Consequently, as a financial advisor, you play a major role in helping each of your clients turn that thought into additional contributions. By being able to monitor and analyze each of your client's retirement progress, you can give advice on what may be working well or what may need to be improved.

By showcasing the importance of increased contribution rates and plan participation, you can help to provide an answer to each of your client's "Am I ready?" retirement questions.

The road to retirement readiness begins with your clients. Nudge them to take the wheel by participating and contributing in the plan. Eventually, your encouragement will help drive the success of the plan, but more importantly will spark action to help drive the success of your client's journey to retirement.

1 JHRPS Retirement Research Insights April 2018

GS-P 37040-GE 7/18-37040

John Hancock Life Insurance Company (U.S.A.) (John Hancock USA), John Hancock Life Insurance Company of New York (John Hancock New York), and John Hancock Retirement Plan Services, LLC are collectively referred to as "John Hancock".

John Hancock Retirement Plan Services, Boston, MA 02210.

The content of this document is for general information only and is believed to be accurate and reliable as of posting date but may be subject to change. John Hancock does not provide investment, tax, plan design or legal advice. Please consult your own independent advisor as to any investment, tax, or legal statements made herein.


© 2018 All rights reserved.


Related Articles

How to prudently manage retirement plan operations as a fiduciary

Brief guide to the basic duties of a retirement plan fiduciary

Managing a 401(k) through a market downturn

Leverage wealth management relationships to help expand your business

How efficient are you as a financial advisor?

4 simple steps to showcase your value and improve client retention

Why it’s important to adopt a strategic approach to building client service plans

These articles are not an edorsement of any particular product, service or orginization; nor are they intended to provide financial, tax or legal advice. They are intended to promote awareness and are for educational purposes only.