The North Carolina Department of State Treasurer (NC DST) commits to develop and implement education, tools, and techniques to help employers assist their employees in planning for retirement. The NC DST commitment will utilize a framework of education, engagement and empowerment. The NC DST will target 505 employers in hopes of having 300 employers join the efforts to increase retirement readiness for their employees.
Employer education will be conducted through one-on-one meetings providing a plan review and assessment of the employers current status. Action steps will be defined to enhance employee retirement preparedness. Commitment partners will be available to support the employer in educating employees on the importance of retirement readiness through group and one-on-one counseling sessions.
Engagement will occur through a series of one-day summits led by NC DST and commitment partners. These employer gatherings will foster networking and sharing of best practices. Importantly, it will provide an opportunity to showcase best practices and highlight successes, while also recognizing key achievements. A discussion of behavioral finance and specialty tracks including: role of a plan sponsor, effective participant communication strategies, etc. will be offered.
Finally, NC DST will provide the tools to measure the progress of specific employee groups on the path to retirement readiness. NC DST will work with employers with participation rates of 29 percent or lower to increase their participation rates by 4 percent. NC DST will educate employers regarding the importance of offering a match and assist them in taking action. For employers that have high employee participation rates, NC DST will support employer efforts to increase employee savings rates.
Tools such as an employer scorecard ranking them against goal and peer group will provide specific insight as to savings plan participation rates, savings rates and other key metrics surrounding retirement readiness. Utilizing these tools, NC DST will define focus areas that will help employers make a significant difference in the number of employees who are ready for retirement.
June 2015 March 2016, Capacity Building: The remainder of 2015 will be used to identify partners and resources, design field report formats that are specific to various counties, build contact databases and other associated administrative support functions. The design and implementation phase of the program will commence in 1Q 2016.
March 31, 2016, Pilot Program Design Finalized: Design a pilot program to test the primary thesis of the commitment. Key findings include how best to drive employer participation in the program, how to position messaging, define methodology for educating employers, identify employers to participate in the pilot group.
August 31, 2016, Pilot Program Implementation Completed: Pilot program implementation with the goal to test the NC DST commitment.
September 30, 2016, Pilot Program Review and Learnings Finalized: Summarize findings of the pilot program and adjust commitment to action approach to incorporate findings.
March 31, 2017, Employer Education Implementation Finalized: Employer-specific retirement readiness assessment (e.g., an employer scorecard). Inform employers how to impact retirement readiness. Support education with an online employer toolkit, information about various reports and tools, and information about how to drive performance.
June 30, 2017, Employer and Stakeholder Engagement Completed: Multiple, one-day regional summits to further educate and engage employers.
December 31, 2017, Employer Empowerment: Follow up with employers to assess progress. What proved to be helpful in increasing retirement readiness; what areas proved to be more difficult to drive change? What can be done differently in the future? Develop customized 12-month employer plans for enhancing retirement readiness.
March 31, 2018, Insights and Learnings of the Commitment: NC DST will learn a lot about driving retirement readiness through this commitment. NC DST anticipates adjusting the commitment program based upon these findings.
Many retirees will struggle to determine their ability to pay for necessities, such as housing, food, and medical expenses. The difficult truth is that many Americans are financially unprepared for retirement. The lack of financial security in retirement represents a meaningful hardship in the lives of many Americans at a time when they are vulnerable and least prepared to cope with a financial shortfall.
When Social Security retirement benefits were introduced in 1945, the typical American retired at 65 and had an average life expectancy of 61. Today, the typical American retires between 62 and 64 and may spend 25 or more years in retirement. While Social Security may replace up to 30 percent or more of an individuals pre-retirement income, Social Security alone may not fully fund the average Americans retirement. Pensions and personal savings supplement Social Security, but for many a gap remains between what has been set aside and what will be needed.
Exacerbating this problem is the rising cost of healthcare. It is estimated that a 65 year-old couple today will require $240,000 to cover their medical expenses in retirement. This expenditure represents expenses not covered by insurance.
Finally, this challenge to society is growing each and every day as more baby boomers enter retirement. It is projected that the percent of 65 year-olds will climb from 13 percent of the US population (in 2010) to 20 percent by the year 2030. The conversation about retirement must change and it must change now. The thinking on what it means to retire needs to evolve to match todays realities. The process must begin with one of the most influential groups in the lives of todays American worker, their employer.