According to Fidelity's newly released findings, "80% of employers have employees that delay retirement due to lack of retirement savings", and furthermore, "nearly 60% of employers say that 25% of their workforce is forced to retire early due to reasons beyond their control". Aegon recently released a survey that found that "workers who are in excellent or good health have a more positive outlook about their future retirement compared with those in fair or poor health. This highlights a disconnect between the concerns people have about their health in older age and their current health-related behaviors." Something about those statements rings as incongruent. It is exceptionally challenging in today's environment for people to be properly prepared for retirement with all of the other stressors that exist, whether financial or health related. These challenges are not new, rather they are becoming a somewhat overlooked focus of plan sponsors everywhere that determine how to position their benefit programs.
With the unenviable task of keeping budgets reduced and increasing costs for primary benefit programs, the future can sometimes seem bleak. Add to that the additional pressure that comes along with the assumed (still delayed) fiduciary rule from the DOL, and you get a largely unfamiliar situation for a lot of people. That pressure can take a toll on decision making and create an "analysis paralysis". Imagine if you can, how the pressures to do the right thing for the plan participant conflict with your daily activities as a business owner or plan representative and you can quickly see how things could spiral out of control. Business owners are under fire like no other time in history, and from all angles.
So... what's the solution? How can these complex situations be detangled?
One area that we have seen a lot of opportunity for success is in the multiple employer plans. I like to refer to it as the "FedEx effect". Getting the same access and opportunity as a larger plan at functionally the same costs that a larger plan gets. Those larger companies often have multiple people on staff to administer and give clarity to the folks inside the plan. If we as an industry, start to point people in the direction of these multiple employer plans, it may benefit smaller plans and businesses. Now, it should be said, that challenges in this type of system certainly exist, but in our view, there are many upsides also. Imagine being able to offload a large amount of fiduciary and administrative burden to a group of experts that would allow you to focus on running your business, not on the challenges that exist because you own a business.
I recently had a conversation with a business owner who shared with me, "I am much better at being in business than I am at running a business". It struck me as an open vulnerability that most employers have, and may not know how to tackle. If we can keep in mind that programs exist for clients such as this, we may all be able to affect positive change in employees' lives more rapidly than previously thought. Those folks who are challenged by financial stressors and health costs may be able to make more appropriate decisions if the leadership in the business is able to help them navigate through those complexities, rather than spending time working on the employee benefits.
Just my thoughts!
This information was developed as a general guide to educate plan sponsors but is not intended as authoritative guidance or tax or legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation. In no way does advisor assure that, by using the information provided, plan sponsor will be in compliance with ERISA regulations.
Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Stratos Wealth Partners, Ltd., a registered investment advisor. Stratos Wealth Partners and North Star Strategic Wealth Partners are separate entities from LPL Financial.