DC language study: Start the retirement income conversation

Our 2021 DC language study took a closer look at the language of defined contribution (DC) plans. Alongside Maslansky + Partners, a communications and research strategy firm, we conducted a national survey of 997 large-plan participants to highlight how the right language could help plan sponsors engage, inform, and motivate employees to save for retirement. 

As more and more Boomers reach the age of 65, plan sponsors are under pressure to evolve their plan design, investment menu, and participant engagement efforts. 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 participant 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.

We found that our study participants want their employers to communicate with them about the transition from accumulating wealth to income generation, especially as it relates to their options within their current plan. In fact, across all ages, 60% of participants would rather achieve “retirement income” versus “retirement savings.” And, while they want the freedom to do what they want, when they want — when it comes to their financial retirement goals, they preferred to achieve realistic “financial security” over the more idealistic “financial freedom.”

For sponsors who offer participants the ability to stay in plan post-retirement, it’s important to not only frequently communicate this option, but use compelling language about the potential benefits of doing so. Our research found that many participants would value a “Retirement Ready Program,” with the income-generating investments, guidance, and tools they need to transition from a full-time income at work to a more reliable stream of income in retirement.