Spring 2006

Is Your Plan Ready or Retired?

Author: Christine Chaia, Assistant Vice President, Retirement Plans Group Marketing, The Hartford

This year, the first wave of Baby Boomers becomes eligible to begin taking distributions from their retirement programs. It is the dawn of a new era in retirement planning, when Boomers' focus will shift from wealth accumulation to wealth preservation.

In accordance with this shift, plan sponsors will have the additional responsibility of providing education to these Boomers, many of whom may not be financially prepared for what lies ahead. Experienced retirement plan providers like The Hartford can help.

A Different Generation
To address their need for education, it is important to recognize some of the unique characteristics of retiring Baby Boomers.

This generation will challenge traditional notions of retirement, redefining it as a time of new opportunities and the continuation of an active lifestyle. Their expectations for retirement exceed those of past generations, and most feel confident they will be prepared to finance their dreams. In fact, the majority of Americans -sixty five percent - are "somewhat to very confident" that they will have enough money to retire, according to the 2005 Retirement Confidence Survey conducted by Employee Benefits Research Institute.

Despite their optimism, Boomers face a number of potentially significant financial burdens, including declining social security benefits, the abolition of the traditional pension plan, and longer life expectancies that necessitate more robust retirement savings. In addition, Boomers often find themselves "sandwiched" between caring for both their elderly parents and grown children.

While this generation may be more educated about the importance of saving for retirement, many did not save enough during their working years. In fact, the number of people aged 65 and older who have filed for bankruptcy has tripled in the past decade, due most often to inadequate savings rates and poor planning for medical emergencies. For a population confident that it will have enough to retire, only 51% of those aged 50 and up report having accumulated $50,000 for that goal.

A New Responsibility for the Plan Sponsor
While these statistics are alarming, conscientious plan sponsors can help reduce the percentage of Boomers headed toward retirement trouble through simple education. When it comes to educating Boomers about their retirement plan options, ask yourself the following questions:

    • When is the last time we reviewed our employee education program?
    • Do we hold regular employee educations sessions that are not solely focused on enrollment?
    • Does our program focus more on participation or increasing deferrals?
    • Is our program targeted based on age or career cycles?
The number of Boomers preparing for retirement necessitates a role change for retirement plan sponsors. Employee education programs must begin to include a more comprehensive curriculum based on the various stages of the career cycle. Older employees need to understand the principles and options for wealth preservation, while younger employee populations will focus on accumulating retirement assets.

As traditional pension plans disappear and defined contribution plans become a primary savings vehicle for retirement, plan sponsors can - and must- take an active role in helping all employees prepare to retire comfortably.

Action Plan for Reaching Out
Step 1: Target your Audience
Consider targeting specific age groups or career levels when developing an employee education program. Offering educational content geared toward age-specific needs means employees receive relevant, actionable information.

Step 2: Customize the Presentation to Fit the Need
Boomers have specific needs and financial challenges that require real solutions. Targeted, topical seminars such as "Your Rollover Options" or "How to Help Ensure You Will Not Outlive your Assets" can help pre-retirement Boomers take inventory of their financial situation and make informed decisions about how they will manage their assets in retirement.

The Hartford offers targeted employee education through its Plan for Life Series®, which includes twelve presentations on a variety of investment concepts and career cycle planning strategies. Several of these presentations are designed specifically Boomers preparing to retire.

Step 3: Be Visible at the Education Meetings
Consider attending enrollment meetings and educational sessions with employees. Your presence sends a strong message, even if your role is simply to introduce the presenter and the topic being discussed. Attending such meetings indicates that you care about your employees and hear their concerns and questions, and can help you deliver additional programs in the future based on their needs.

Don't let your plan retire. Use these action steps to assess your employee education program and refresh it for enhanced utilization and effectiveness.

Christine Chaia is Assistant Vice President of Marketing for the Retirement Plans Group at Hartford Life, based in Simsbury, CT. Christine can be reached at Christine.chaia@hartfordlife.com.

NOT FOR USE WITH PARTICIPANTS

"The Hartford" is The Hartford Financial Services Group, Inc. and its subsidiaries, including issuing company Hartford Life Insurance Company.

The Hartford's 401(k) retirement programs are funded either by a group variable annuity contract (Countrywide: HL-14991; NY & FL: HL-14973) or by a group variable funding agreement (HL-16553 and HL-16553 (NY)) issued by Hartford Life Insurance Company, Simsbury, CT.

The views expressed here are those of Christine Chaia. Ms. Chaia's views are not necessarily those of The Hartford and should not be construed as investment advice.