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It’s no secret that Americans are facing a retirement crisis. Based on current trends, Americans will be confronting rates of elder poverty in the not-too-distant future that haven’t been seen since the Great Depression of the 1930s. Professor Teresa Ghilarducci estimates that of the 18 million workers who were between ages 55 and 64 in 2012, 4.3 million are projected to be poor or near-poor when they turn 65, including 2.6 million who were part of the middle class before reaching retirement age. 

 

The concept of retirement has changed dramatically in the decades since the introduction of the 401(k), which has transformed the way people should think about and plan for retirement. As defined benefit plans have disappeared, employees have shouldered an increasing share of responsibility and risk in saving for retirement. But mounting evidence has shown that defined contribution plans are not working. And an increasing number of people who have reached the traditional retirement age are not ready to retire. More and more, people today are planning to continue working, for multiple reasons that include financial necessity, increased lifespans, and social connectivity. 

 

In response to changing concepts about what retirement means and could look like in the future, retirement planning is changing too. As participant contributions to employer-sponsored retirement plans have stagnated or declined in recent years, financially stressed employees are increasingly turning to their employers for help. In response, employers are starting to provide financial wellness resources as part of their benefits packages, especially when realizing the significant cost of financially stressed employees in terms of lost productivity, absenteeism, and turnover. Advisors are reintegrating the whole person and their financial goals into the retirement planning process, and personalized advice is becoming the new norm. 

 

The bottom line is that employees who are not meeting or barely keeping up with their immediate financial needs cannot save for retirement. What do these two rapidly accelerating trends—increased longevity and reduced retirement savings—mean for plan advisors? This white paper discusses the retirement crisis and what advisors can do to help plan participants address it. Topics covered include the surprising difference working longer can make, the increasingly important role of HSAs, special challenges that women face, and how technology can be an asset and differentiator for advisors.

 

The concept of retirement has changed dramatically in the decades since the introduction of the 401(k), which transformed the way that people think about and plan for retirement. It has largely replaced defined benefit plans and become the de facto source of retirement funding for many employees. Its creators, however, intended for the 401(k) to be a supplement to employee pensions, not a wholesale replacement.[1] More importantly, the 401(k) is failing as a solution for a financially secure retirement. Even in combination with Social Security, the typical amount of individual retirement savings most families have managed to accumulate will not be enough to support a comfortable standard of living, particularly with the average lifespan continuing to increase. Millions of Americans are facing the prospect of living in poverty after a lifetime of working. 

 

In response to changing ideas about what retirement means and will look like, retirement planning is changing too. With inadequate savings and investments, more people are planning to continue working at a full time job even after they become eligible for Social Security. Many because they realize they will have no other option, while others choose to remain in or return to the workforce for reasons ranging from social engagement and mental stimulation to following a passion. Yet older employees still face discrimination when it comes to keeping their existing job or looking for a new one.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At the same time, participant contributions to employer-sponsored plans have stagnated or declined in recent years. Financially stressed employees are increasingly turning to their employers for help. In response, employers are starting to provide financial wellness resources as part of their benefits package, especially when realizing the significant cost of financially stressed employees in terms of lost productivity and absenteeism. The bottom line is that employees who are not meeting or barely keeping up with their immediate financial needs cannot save for retirement. And so the problem continues to snowball. 

 

What do these two rapidly accelerating trends—increased longevity and reduced retirement savings—mean for plan advisors? This white paper discusses the retirement crisis and what advisors can do to help plan participants address it. 

Individual retirement accounts and 401(k)s make up the bulk of retirement savings in the US. The Retirement Income Deficit (RID) calculates the gap between what American households have actually saved and what they need to have saved to maintain the same standard of living in retirement. The RID is calculated based on data collected from the Federal Reserve’s triannual Survey of Consumer Finances. According to the Center for Retirement Research at Boston College, as of 2015 the nation’s RID has risen from $6.6 trillion in 2010 to $7.7 trillion.[2] 

THE RETIREMENT INCOME DEFICIT GAP

From an individual perspective, the data on the amount of retirement savings accumulated by families of working age (31-61 years old) is even more disturbing, as summarized in the following chart, which shows the contrast between the average and median amount of retirement savings for Americans by age group. Younger individuals and families will have had less time to save so their totals will be less, and those who are older would be expected to have saved more and have those savings compounded.

 

When a dataset has a wide range of values from high to low, the average can be misleading as a measure and paints an overly rosy picture. In this case, the average appears to be relatively high because a minority of high income families (about 20%) have accumulated a large amount of savings for retirement, while the majority of middle or low income workers (the remaining 80%) have saved little or nothing at all. The median, the number at which half the population is above and the other half is below, tells a very different story. 

 

At age group 32-37, the average amount of retirement savings is $31,644. The median is only $480—not enough to even show up on the chart. By age 56-61, the average is $163,577. But the median retirement savings for families is just $17,000—an amount that is barely above the 2018 federal poverty level of $16,460 in annual income for a two person household.[3] Spread out over 20 to 30 years of retirement, $17,000 won’t go very far. Total retirement savings for single individuals and women are even less. And as 8,000 to 10,000 Americans turn 65 every day, nearly half of Americans have no retirement savings at all.[4] 

FAMILIES' AVERAGE AND MEDIAN RETIREMENT SAVINGS BY AGE GROUP, 2016

Working Longer Is Likely A Necessity For Most People 

Given these numbers, it’s no surprise that most people are planning to work past 62, the age at which everyone is currently eligible to begin claiming Social Security benefits. While 79% of workers plan to continue working at least part-time in retirement, the nonpartisan Employee Benefits Research Institute reports that only 29% of employees actually did in their most recent annual survey.[5] This gap between the expectation of continued employment income and the reality of sudden job loss contributes to the retirement crisis. 

THE RETIREMENT INCOME REALITY GAP

The reasons for the gap between expectation and reality are varied, but have this in common: many Americans find themselves retiring unexpectedly. A large percentage of retirees (48%) leave the workforce earlier than planned, for reasons including health problems or disability, changes at their employer, such as downsizing or business closure (26%), and caring for a spouse or family member. A smaller number of retirees do mention positive reasons for retiring early, such as being able to afford an earlier retirement or simply wanting to do something else (24%). The latter are often among those who go back to work or start a business out of a desire to remain productive. 

 

‘Bridge’ jobs frequently fill the gap between a full-time, wage-and-salary job and full retirement from the workforce, and can be either full-time or part-time. For many who are approaching the usual retirement age, a bridge job can be an extension of current work that helps ease the transition into retirement through offering a less stressful or more flexible job, and adapt to changing health status or caregiving needs. Others may use the bridge job to pursue a second career or launch their own business. The Center for Aging and Work at Boston College reports that the majority of older Americans with career jobs retire gradually, in stages, rather than all at once. About 60% of those leaving a full-time career job after age 50 and about 53% of those leaving after age 55 moved to a bridge job rather than directly out of the workforce.[6]

 

Despite employment law that prohibits discrimination on the basis of age, some employers use tactics such as layoffs and eliminating positions to discard older workers and hire younger, lower-paid ones instead. In a survey conducted by AARP, more than 50% of people over the age of 50 reported they had either been subjected to age discrimination or had witnessed it at work.[7] At the same time, four people out of every five who are older than age 50 report that they will need to delay retirement and continue working. 

Retirees who do continue to work choose to do so for multiple reasons as well. The EBRI survey also reports that financial reasons were a significant motivation, such as wanting additional spending money, or simply needing money to make ends meet (42%). Other financial reasons included a decrease in the value of savings or investments (23%) or to keep health insurance or other work-related benefits (13%). The latter is frequently cited as a motivator for employees who have not reached 65, the age at which they qualify for Medicare, to keep working longer than they might like. Many retirees continue working for personal reasons as well, such as staying active and involved (90%) or because they enjoy it (82%).

 

Analyzing Bureau of Labor Statistics data, the Pew Research Center reports that the percentage of workers age 65 an older is increasing—more than at any time since the turn of the century. In May 2016, 18.8% of Americans ages 65 and older (nearly 9 million people), reported being employed full- or part-time, continuing a steady increase since May 2000, when just 12.8% of 65-and-older Americans (about 4 million people), said they were working.[8] These older employees are adding substantial numbers to the US workforce. According to the Federal Reserve, all of the net workforce growth since 2000 (approximately 17 million people) has consisted of people over 55.[9] The report also speculates that with current demographic trends, workers 65 and older are likely to become an even larger share of the workforce over the next 20 years.

That’s a good thing. Economists are already forecasting a shortage of skilled labor across many jobs such as engineering and nursing as soon as the year 2020. The Federal Reserve Bank of Atlanta notes that while the economy continues to expand, the current labor market is tight and employers are experiencing challenges finding qualified workers across multiple skills and sectors, particularly in manufacturing and construction labor.[10] In fact, the shortage of qualified workers is starting to constrain the economy as a whole. 

 

So, older workers both need to and want to stay employed, and employers are experiencing a shortage of qualified and skilled labor. It sounds like a perfect match—a win-win for both older workers and employers. Then what’s the problem? 

 

 

Outdated Myths About Older Employees

There are a number of persistent myths and negative stereotypes that surround older workers. Among them are the misconceptions that older workers are less engaged and less productive, much more expensive in terms of healthcare costs, and unwilling to learn new skills, especially technology-related ones. But there’s a new narrative of aging in America. People are not only living longer; they are remaining healthier and more active along the way. 65 is no longer considered ‘old’ any more

 

One especially pernicious misconception is that employees who ‘fail to retire on time’ can cost an employer as much as $50,000 for every year the employee continues to work.[11] That estimate is based solely on actuarial data, and has no real-world evidence to support it. In fact, while the costs associated with workers over 50 do tend to increase somewhat with age (particularly healthcare costs), the impact on the employer is minimal. According to Aon Hewitt and AARP, recent trends in compensation and benefits have reduced the relationship between age and labor costs to the point where age is not a significant factor in the costs of hiring and retaining workers.[12] 

While the rapid increases in healthcare costs continue to make headlines, the share of large employers’ annual rewards costs—wages and salaries plus benefits plus any additional compensation—allocated to employee benefits has remained similar over time, while continuing to be the biggest drivers of labor costs. Based on an analysis of compensation data maintained by Aon Hewitt, AARP has concluded that cash compensation, healthcare, retirement, and paid time off benefits comprise 98% of total compensation costs in large U.S. companies.[7] 

Their analysis goes on to show that compensation packages have evolved toward a more age-neutral distribution of rewards costs for three reasons. One is that 90% of large companies now use performance-based compensation rather than compensation based on the length of employment. Instead of pensions, defined contribution plans have largely replaced defined benefit plans, and are not specifically tied to age or length of employment. And healthcare costs have risen more slowly for workers over 50 (4-6%) compared to younger workers (7-8%). This slower pace of increases for older workers is shrinking the effect of age on employer-paid healthcare costs. Combined, the three trends listed here have weakened the relationship between age and labor costs. The result is that an experienced professional age 50+ doesn’t automatically cost more than a younger employee.

Older workers offer other advantages as well. Employees over 50 have been demonstrated to be the most engaged generation, averaging 65% compared to 60% for younger workers in an Aon Hewitt survey.[13] In the same study, researchers noted that even small increases in the level of engagement have large implications for business results: a 5% increase in engagement can increase revenue growth by 3%. For a Fortune 1000 company with $5 billion in revenue, a 5% increase in employee engagement equals a $150 million revenue increase. In addition, a 2016 SHRM survey of HR professionals[14] cites several advantages of older workers, including greater professionalism, a stronger work ethic, greater reliability, and lower unplanned turnover, the latter of which helps reduce employers’ costs. Their experience, knowledge, and quick decision-making skills are additional advantages that can offset any small increase in healthcare costs. 

Despite the image portrayed in popular media of the older office worker who can’t figure out how to send a tweet, a recent survey by Dropbox showed that workers over 55 used 4.9 forms of technology per week, compared to the overall average of 4.7 per week. Only 13% of respondents aged 55 and older reported having trouble working with multiple devices, compared to 37% of 18-to-34-year olds. Yet the younger cohort is more likely (59%) to assume that older workers are slow to adopt technology skills.[15] 

 

“It’s dangerous for companies to assume that if you’re under 35, you’re tech savvy,” says executive coach Paul Bernard, in an article published in TechRepublic. “In many cases, I’ve seen that many older people are able to combine tech-savvy with communication skills— almost without exception, it’s easier for older workers to pick up more tech skills than younger workers, who are tech savvy, to pick up communication skills.” 

 

In addition to being productive employees, seniors are also driving the economy. In 2015, for example, people over the age of 50 made up 35% of the US population, but contributed 43% of the total Gross Domestic Product (GDP), and spent $750 billion more than those under 50.[16] Living longer while remaining healthier means that for many people, retirement can be a new chapter in their life. People over 55 who have the financial resources to do so are starting businesses at record rates, often in response to workplace age discrimination, to give back to their community and to pursue a passion doing something they enjoy.[17]  

2. Pension Rights Center (2015). Nation’s retirement income deficit now $7.7 trillion. March 12. http://www.pensionrights.org/newsroom/releases/nations-retirement-income-deficit-now-77-trillion

3. US Department of Health and Human Services (2018). Poverty guidelines. https://aspe.hhs.gov/poverty-guidelines

4. Morrissey M. (2016).The state of American retirement: How 401(k)s have failed most American workers. Economic Policy Institute. https://www.epi.org/publication/retirement-in-america/#charts

5. Employee Benefit Research Institute. (2017). 2017 RCS fact sheet #2: Expectations about retirement. https://www.ebri.org/ pdf/surveys/rcs/2017/RCS_17.FS-2_Expects.Final.pdf

6. Cahill KE, Giandrea M, Quinn JF. (2013). The importance of bridge jobs. The Center on Aging and Work at Boston College. https://www.bc.edu/research/agingandwork/projects/bridgeJobs.html

7. Fleck C. (2014). Forced out, older workers are fighting back. AARP Bulletin. May. http://www.aarp.org/work/on-the-job/info-2014/workplace-age-discrimination-infographic.html

8. Desilver D. (2016). More older Americans are working, and working more, than they used to. Pew Research Center. June. 

http://www.pewresearch.org/fact-tank/2016/06/20/more-older-americans-are-working-and-working-more-than-they-used-to/ 

9. Emmons W. (2018). Older workers account for all net job growth since 2000. Federal Reserve Bank of St. Louis. 

https://www.stlouisfed.org/on-the-economy/2018/january/older-workers-account-almost-all-job-growth-2000 

10. Board of Governors of the Federal Reserve System (2018). The beige book. January 17. 

https://www.federalreserve.gov/monetarypolicy/beigebook201801.htm 

11. Prudential (2017). Why employers should care about the cost of delayed retirement. White paper. 

http://research.prudential.com/documents/rp/SI20_Final_ADA_Cost-of-Delayed_1-4-17.pdf 

12. Aon Hewitt (2015). A business case for workers age 50+; A look at the value of experience. AARP report. https://www.aarp.org/content/dam/aarp/research/surveys_statistics/general/2015/business-case-workers-age-50plus.doi.10.26419%252Fres.00100.001.pdf

13. Aon Hewitt (2014). 2014 trends in global engagement. Report. http://www.aon.com/attachments/human-capital-consulting/2014-trends-in-global-employee-engagement-report.pdf 

14. Society for Human Resource Management (2016). The aging workforce research initiative. Report. July 7. https://www.shrm.org/hr-today/trends-and-forecasting/research-and-surveys/pages/aging-workforce-research-initiative.aspx 

15. Rayome AD. (2016). Myth busted: Older workers are just as tech-savvy as younger ones, says new survey. TechRepublic. August 10. 

https://www.techrepublic.com/article/myth-busted-older-workers-are-just-as-tech-savvy-as-younger-ones-says-new-survey/

16. Holtzman J. (2017). Americans 50+ disrupt ‘burden’ stereotype by driving the economy. AARP Research. August. https://www.aarp.org/ research/topics/economics/info-2015/longevity-economy-economic-growth-new-opportunities.html 

17. Buchanan L. (2017). Boomers are ditching retirement for entrepreneurship. And they’re killing it. Inc. March 9. 

https://www.inc.com/magazine/201703/leigh-buchanan/life-cycle-pedego-bikes.html

Boomers and the generations that are following them are demanding and using tools to pursue meaning later in life more than ever before—creating and actively contributing instead of turning into passive consumers as they age. Rather than accumulating an arbitrary sum for retirement and spending it down, more people want to be able to meet their financial goals at every stage of life, including retirement. The result is that goal-based planning is assuming increased importance for every generation, as is planning for income replacement during retirement. 

 

As the average lifespan is increasing, for many people retirement is as much about how they want to spend their time as it is their money. How an individual or couple chooses to live their lives largely determines how much money they will need in retirement. So measuring ‘retirement readiness’ will become increasingly individualized, and plan sponsors may want to see whether participants are making progress towards their personalized goals, rather than an industry benchmark. Since no one can save for retirement when they are burdened by debt, making progress toward the goal of financial well-being will become the starting point for retirement planning, particularly for younger workers.

Working In Retirement, Or Unretiring ​

Whether by necessity, choice, or both, working at least part-time in retirement is more and more likely to be a reality for today’s plan participants. We know now that for many people, the 401(k) can’t do it all, even when combined with Social Security benefits. This is especially true for women, people of color, and single individuals; these groups all tend to have lower accumulated savings, and lower average benefit amounts. Women and minorities in particular have less income to begin with, due to gender and racial income disparities, and are at a disadvantage when it comes to saving for retirement, according to the Pew Research Center.[18] And for younger workers, what Social Security will look like as they approach retirement is unknown. 

Continuing to work part-time or full time after reaching full retirement age provides several advantages to older workers. First, under current law they can begin to draw Social Security benefits without penalty, if they choose, or delay drawing Social Security up to age 70, which increases their future monthly income. For plan participants born after 1943, every year past their full retirement age that they delay applying for benefits increases their benefit amount by 8%.[19] While plan participants cannot make traditional IRA contributions past age 70½, working at least part-time allows them to continue contributing to an existing 401(k) or Roth account, subject to income restrictions.[20] And of course, delaying the drawdown of retirement assets allows them to compound longer. 

Continuing to work for even a short amount of time past 65 can have a surprisingly large impact on income in retirement. According to a new working paper by the National Bureau of Economic Research, using data from the Health and Retirement Study, the authors found that working just three to six months longer has the same result as saving an additional one percentage point of earnings for 30 years. Working just one month longer has the same effect as increasing retirement saving by one percentage point for 10 years before retirement.[21]

There are multiple ways to increase income in retirement (or earlier) besides working for a large employer or small business. With the rise of the sharing economy and the increasing popularity of the side hustle, people can earn money by driving their car or renting out a spare bedroom, monetizing a hobby, teaching a skill, offering freelance services, or providing consulting in an area of professional expertise. Having additional sources of income besides retirement savings can also reduce sequence of returns risk, a serious concern for most people as longevity increases. 

Health Care Costs And HSAs

A common expense in retirement that plan participants frequently fail to consider is the cost of healthcare. One study by Fidelity estimates that the average couple should plan to spend roughly $275,000 to cover healthcare costs during retirement.[22] Continuing to work longer may help here as well, and not only in terms of saving more. The social interactions, cognitive demands, and physical activity that working as an employee or a volunteer facilitates may offer some protective health benefits. While a direct cause-and-effect relationship is difficult to untangle because poor health is often an impetus for retirement, and consequently those who remain in the workforce are more likely to be in good or at least adequate health, there is some evidence that continued work is positive. 

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Research is beginning to accumulate that the social connection and cognitive stimulation provided by working or volunteering during retirement can aid in maintaining health. Harvard Medical School professor Nicole Maestas, in an interview for The New York Times, stated that while current evidence is mixed, “The studies I have seen tend to show that there are health benefits to working longer. What is the benefit of work? Activation of the brain and activation of social networks may be critical.”[23] In addition, research by AARP on a national project involving 2,000 volunteers across 20 cities noted both physical benefits and cognitive improvement in people over 50 who volunteered in schools.[24]

 

Regarding healthcare costs in retirement, HSAs are likely to assume increased importance as higher healthcare costs are passed on to plan participants. HSAs offer a triple tax advantage--contributions are tax-free, compound tax-free, and are tax-free when withdrawn. Yet many plan participants and sponsors remain unaware of the advantages HSAs provide and often confuse their rules with those of FSAs, assuming that any money contributed to an HSA must be spent by the end of the year or else it is lost. One additional benefit of HSAs, for those who qualify for them, is that unlike a FSA that disappears when an employee changes jobs, a HSA remains with the employee and can be carried over to a new job. Younger workers should especially be encouraged to contribute to HSAs, because their savings can have longer to grow and compound, and are not dependant on remaining with the same employer. And, HSAs can be especially important for those who switch to part-time work or retire altogether sooner than expected because of health issues. 

Advisors can play an important role in educating plan participants about the advantages of HSAs. Managing investments in HSAs is a natural extension of managing a company’s retirement plan, and offers an opportunity for advisors to add value as well as assets. HSAs currently hold $45 billion dollars nationally, an amount that is largely in cash and is estimated to increase to $69 billion by the end of 2019.[25] 

Closing The Retirement Income Gap For Women 

Women as a group are at a disadvantage when it comes to saving for retirement, and are almost twice as likely to live in poverty in retirement compared to men, according to an analysis of US Census data by the National Institute on Retirement Security.[26] Because women typically earn less and spend more time out of the workforce, their accumulated savings are less, and their average Social Security benefit is smaller compared to men’s. In 2017 for example, women’s average monthly benefit was $1,231.50 compared to an average of $1,583.77 for men.[27] In particular, women who are widowed, divorced, and over age 70 are more likely to rely on Social Security benefits for the majority of their income. Because women live an average of five years longer compared to men, their savings have to last longer. Their healthcare costs are likely to be higher as well, especially due to the expense of long term care.[28] 

While policy changes on a national level are needed to address gender income disparities, plan sponsors and advisors can help their plan participants save more for retirement now through features such as auto-enrollment and auto-escalation. Pairing these, especially combined with a higher default savings rate, has been shown to increase the amount of participants’ savings in defined contribution plans. A 2017 study by the Defined Contribution Institutional Investment Association (DCIIA) showed that when plan sponsors implemented neither auto-enrollment nor auto-escalation, only 44% of such plans had savings rates above 10% of compensation, including both employee deferrals and employer match. But when sponsors implemented auto enrollment, 67% of them had savings rates above 10%. The percentage rose even further, to 70% for plans where sponsors implemented both auto-enrollment and auto-escalation. In addition, plan sponsors’ fears of plan participant complaints about the use of default elections were shown to be unwarranted; opt-out rates by participants were negligible even at higher default rates.[29]

Research has also shown that women as a group tend to be less financially literate and may benefit from more targeted, personalized financial education that can be provided through defined contribution plans.[30] Developing better communication strategies to reach out to women can have benefits for advisors as well: women are potential clients for firms that offer wealth management in additional to retirement plan advising. More women are starting businesses, are interested in investing, are equally likely to receive significant inheritances, and are the largest group of clients who leave advisory firms—widows frequently cite being ignored by their advisor while their husbands were alive as the primary reason for choosing another firm.[31] 

The Role Of Technology

Retirement planning has been slow to catch up with the trend of digital transformation. A growing number of people now expect a digital experience from all their financial services. In fact, 56% of clients between the ages of 30-40 say that a comprehensive digital experience is highly important, according to a 2018 survey from Wealth Management magazine.[32] And consumers are backing up their words with behavior. According to a 2017 PwC study, 46% of customers are skipping bank branches altogether, relying instead on smart phones, tablets, and online applications.[33] And of course millennials are well-known for preferring digital experiences, as the first generation to have grown up with readily available digital consumer technology. 

 

Firms that are looking to grow their book of business are using technology to scale their ability to serve more clients without adding staff. Technology also allows for a more personalized experience, which is key to increasing plan participant engagement. Financial wellness technology can scale advisor efficiency and reach with configurable self-service portals, simple and multi-channel advisor-plan participant communication, calculators, and content. Client touch points can be increasingly proactive rather than reactive. For example, an advisor could easily see that a client has experienced a new life event and then quickly reach out with information or an invitation to schedule a phone meeting.

All of these features can be used by both existing wealth clients and participants in defined contribution plans. Including financial wellness technology can be a powerful differentiator for plan advisors looking to attract new business and retain existing plans. According to Prudential, 82% of employers believe they can benefit from a financially secure workforce, and a majority are interested in providing financial wellness tools for their employees because it’s the right thing to do.[34]

16. Holtzman J. (2017). Americans 50+ disrupt ‘burden’ stereotype by driving the economy. AARP Research. August. https://www.aarp.org/ research/topics/economics/info-2015/longevity-economy-economic-growth-new-opportunities.html 

17. Buchanan L. (2017). Boomers are ditching retirement for entrepreneurship. And they’re killing it. Inc. March 9. 

https://www.inc.com/magazine/201703/leigh-buchanan/life-cycle-pedego-bikes.html

18. Patten E. (2016). Racial, gender wage gaps persist in U.S. despite some progress. Pew Research Center report. July 1. 

http://www.pewresearch.org/fact-tank/2016/07/01/racial-gender-wage-gaps-persist-in-u-s-despite-some-progress/ 

19. Social Security Administration. (2018). Benefits planner: Retirement. https://www.ssa.gov/planners/retire/delayret.html

20. Marotta DJ. (2016). Can I continue retirement saving past age 70½? Forbes. November 23. https://www.forbes.com/sites/davidmarotta/2016/11/23/can-i-continue-retirement-saving-past-age-70-12/#4d74a9aeb734

21. Bronshtein G, Scott J, Shoven JB, Slavov SN. (2018). The power of working longer. Working paper 24226. National Bureau of Economic Research. January. http://www.nber.org/papers/w24226.pdf

22. Fidelity. (2018). How to plan for rising health care costs. Viewpoints. April 18. https://www.fidelity.com/viewpoints/personal-finance/plan-for-rising-health-care-costs

23. Farrell C. (2017). Working longer may benefit your health. The New York Times. March 23. https://www.nytimes.com/2017/03/03/ business/retirement/working-longer-may-benefit-your-health.html

24. AARP. https://www.aarp.org/experience-corps/

25. Benjamin J. (2018). Growth of HSAs opens new market for financial advisors.Investment News. January 8. http://www.investmentnews.com/article/20180108/FREE/180109942/growth-of-hsas-opens-new-market-for-financial-advisers

26. Oakley D, Brown JE, Saad-Lessler J, Rhee N. (2016). Shortchanged in Retirement: Continuing Challenges to Women’s Financial Future. National Institute of Retirement Security. March. 

https://www.nirsonline.org/2016/03/women-80-more-likely-to-be-impoverished-in-retirement/

27. Campbell T. (2017). How big is the average person’s Social Security check? The Motley Fool. August 30. https://www.fool.com/retirement/2017/08/30/how-big-is-the-average-persons-social-security-che.aspx

28. Yamamoto D. (2013). Health care costs from birth to death. Society of Actuaries. https://www.soa.org/research-reports/2013/research-health-care-birth-death/

29. Cohen J, Dietch J, Starr P, Tischbein A. (2017). DCIIA fourth biennial plan sponsor survey. Defined Contribution Institutional Investment Association. December. https://c.ymcdn.com/sites/dciia.site-ym.com/resource/collection/23D6FA15-31A6-4ABA-826B-A8718DC03E59/ DCIIA_Fourth_Biennial_Plan_sponsor_survey_8._FINAL.11.30.17.pdf 

30. Lusardi A, Mitchell OS. (2014). The economic importance of financial literacy: Theory and evidence. Journal of Economic Literature, 52 (1): 5-44. https://www.aeaweb.org/articles?id=10.1257/jel.52.1.5

31. Rehl KM, Moor CC, Leitz LY, Grable JE. (2016). Widows’ voices: The value of financial planning. Journal of Financial Service Professionals, 70 (1): 53-60. https://www.financialpro.org/pubs/subs/journal/docs/2016/JFSP0116_53-60.pdf

32. Wealth Management. (2018). 2018 advisor technology snapshot. February 21. 

http://www.wealthmanagement.com/technology/2018-advisor-technology-snapshot

33. PwC Financial Services Institute. (2017). Digital transformation in financial services. Report. 

https://www.pwc.com/us/en/industries/financial-services/research-institute/top-issues/digital-transformation.html

34. Prudential. (2016). The value of employees’ financial wellness. Report. 

http://research.prudential.com/documents/rp/CFO-Employee-Financial-Wellness-012516.pdf

Plan advisors have an important role to play in re-shaping the concept of retirement to help their participants confront a rapidly changing landscape. Advisors’ roles are shifting too, toward re-integrating the human element into the process. Perhaps it’s time to discard the idea of retirement altogether, along with the stigma that accompanies aging,[35] in favor of a movement toward personalized financial planning and financial independence. Focusing on what people need to do now in order to support their ideal lives later is inherently more attractive, and offers the advantage of avoiding the cognitive bias of putting off saving until tomorrow comes. 

 

Whatever we choose to call it, retirement, financial independence, or annual income replacement, financial wellness is the starting point. Plan participants need to understand their financial situation, make a plan to reach their goals, and follow through on it, so that they can handle unexpected expenses, make and celebrate progress towards those goals, and live the futures they dream about. Financial wellness helps make retirement dreams realities, allowing plan participants to focus on how they want to spend their time and on what’s important to them, their values and their lifestyle, knowing they will have the income they need to support these. By doing the right thing for plan participants, both plan sponsors and advisors can benefit. 

35 S.N. (2017). The Economist Explains: Why 65-year-olds aren’t old. The Economist. July 18. 

https://www.economist.com/blogs/economist-explains/2017/07/economist-explains-7

Questis, a fully configurable financial wellness technology platform, allows retirement advisors and financial service providers to easily deliver personalized financial wellness programs to their plan sponsors and participants. Founded by experienced financial advisory professionals, Questis pairs the power of software with the customization required to fuel behavior change. With seamless integration tools, processes, and human experts, our platform makes financial wellness simple, available to every participant, and scalable. Now, anyone looking to offer financial wellness as a service can do so simply, and customized to their requirements and branding.

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