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 participants 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 re-think how they approach their plan design, investment menu, and communications strategy as participants shift their mindset from retirement savings to retirement income.

Additionally, participants 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 participants.

Our 2021 DC language study focuses on the impact of language on plan participants’ overall understanding of, and behavior toward, the plan’s investment menu, professionally managed menu options, the potential benefits of staying in the plan post-retirement, and how best to communicate retirement income.

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

1.     Plainspoken language helped participants more easily understand their investment options.

2.    Simply framing options on the investment menu helped participants choose the right option for their needs.

3.    Participants wanted their employers to communicate with them about the transition from accumulating wealth to income generation.

About the study

Together with Maslansky + Partners, we conducted in-depth interviews with seven plan sponsors and connected with more than 1,607 DC plan participants (large employers with more than 5,000 employees) through online surveys and virtual focus groups across the US and Canada. During these sessions, we tested different versions of messages to uncover what works and why. Participant data and quotes reflect research conducted in the US.