Jumpstart the retirement income conversation now
Our ReDefined Contribution Plans 2021 Watch Your Language study took a closer look at the language of defined contribution plans.
In our third key insight, we found that plan members were eager for their employers to start the retirement income conversation — perhaps even earlier than plan sponsors might have anticipated.
Alongside Maslansky + Partners, we conducted in-depth interviews with seven US plan sponsors and connected with over 600 Canadian plan members through online surveys.
How are plan members viewing retirement and income generation today?
When members envisioned retirement, they tended to be more plausible than idealistic. A “dream retirement” was not the goal. The majority plan to still work — but work less. Having enough retirement income is a big part in helping them achieve this goal.
Next, we looked at the appeal of income vs savings. 62% of all plan members would rather achieve “retirement income” vs “retirement savings”. What’s most intriguing is the focus Millennials and Gen X placed on generating income to support their retirement vision.
Additionally, plan members of all ages preferred their employers communicate with them earlier about turning their retirement savings into retirement income. We found that most millennials believed these communications should start at age 45 or younger.
Language had a major impact on how plan members responded to retirement income conversations. Words such as “income” and “payments” were more appealing than “paychecks” or “checks.”
Finally, we found that plan members preferred to receive these communications through the plan’s online portal, in meetings and personal emails.
To learn more about the findings of our 2021 Watch your Language DC research study, visit our website or contact your Invesco DC professional.
Our 2021 Watch Your Language study took a closer look at the language of defined contribution (DC) plans. Alongside word specialists, Maslansky + Partners, we conducted online surveys with 610 DC plan members working for large employers in Canada. The study focused on the impact language can have on members’ overall understanding of the plan’s investment menu, professionally managed options, and how best to communicate retirement income.
As more and more baby boomers reach the age of 65, Canadian plan sponsors are under pressure to evolve their plan design, investment menu, and member engagement efforts to meet this dynamic shift. But while the industry is focused on getting ready for the boomers, we found that millennials and Gen X also want help to plan and prepare for the transition to retirement, perhaps earlier than is expected. Although these member segments are further from retirement, they want employers to start the income conversation at age 45 or younger. Too often, it begins around age 55 or older, which for many is considered too late.
This is a side bar chart shows the percentage of millennial plan members who want to start the discussion about retirement with their employers at the following ages: 64 years old (7%); 60 years or younger (15%); 55 years old (21%); 50 years old (20%); 45 years old or younger (30%); or not at all (7%).
We found that six in 10 members across all ages aspire to achieve retirement income rather than retirement savings. Yet only 25% of our survey participants have learned from their employer about how to create income from their retirement plan assets. What do they want? For employers to communicate with them about the transition from accumulating wealth to income generation, especially as it relates to their options within the current plan. Special communications on this topic are needed, but not via text or video messages. Instead, members of all ages prefer to gain retirement income information primarily through the retirement plan portal, in plain-spoken, benefit-oriented language.
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We connected with over 600 defined contribution (DC) plan members who shared their views through an online survey. Our goal was to gain further insight into how language can impact plan members’ overall understanding of the plan’s investment menu, professionally managed options within the menu, and how to create retirement income.
