Watch Your Language: Executive Summary

How we view and define retirement has undergone a philosophical change. There are multiple factors at play, including longer lifespans, more active lifestyles, supporting or caregiving for family members, lack of traditional pensions, and rising health care costs. These have all added more complexity and disparity to how people live in retirement.

With this new “retire-mentality” comes a seismic shift toward helping defined contribution (DC) plan members turn their retirement plan savings into a stream of income in retirement that may need to last for 20 or more years. Plan sponsors must rethink how they approach their plan design, investment menu, and communications strategy as members shift their mindset from retirement savings to retirement income.

Additionally, members often find their DC plans confusing and wish for clearer language — with less industry jargon — to help them understand their options and make more informed decisions. Plan sponsors can help close the gap of confusion and misunderstanding by carefully selecting words that truly resonate with members.

Our 2021 Watch Your Language study focused on the impact of language on plan members’ overall understanding of, and behavior toward, the plan’s investment menu, professionally managed menu options, and how best to communicate retirement income.

In the Executive Summary, we highlight our key research findings:

1. Plainspoken language can help plan members more easily understand their investment options.
2. Simply framing the investment menu can help plan members choose the right option for their needs.
3. Plan members want their employers to communicate with them about the transition from accumulating wealth to income generation.