Help Savers Get Back on Track

Out of fear or necessity, many employees scaled back or stopped saving for retirement in 2020. As an advisor, you may be in the best position to help them get back on track. What better way to demonstrate your value, build trust and nurture relationships?

As you help participants regain confidence in saving for the future, keep these pointers in mind.

• Reassure savers. Acknowledge that we're all coping with economic uncertainty in different ways, and that there's still time to make retirement savings a priority.
• Suggest specific steps. A specific, simple suggestion can go a long way toward getting a saver back on track. For example, for employees who decided to stop all contributions to a plan, suggest a 1% increase each quarter. Recommend that they set a reminder at the end of a quarter to check their account balance and make small adjustments. And remind those who are eligible — people 50 and older — about catch-up contributions.
• Review risk tolerance. Help employees review their risk tolerance using an online tool or calculator. They may be less risk-averse than they think and open to contributing more to their plan. Or they may decide to make adjustments that bring them greater peace of mind during market volatility.
• Get back to basics. Send them links to resources that simplify saving and investing. Check with providers about videos, emails and other tools that explain the basics of saving for the future. Start with The Standard’s retirement tools and resources for employees.
• Encourage timely repayments. Employees who’ve taken a CARES Act distribution have the option to repay the amount distributed into an eligible plan as a direct rollover. In general, employees may repay all or part of the distribution to an eligible retirement plan within three years of the distribution date. Employees who don’t repay the distribution must include the amount in their income. The distribution is taxable in the year in which they took the distribution, unless they elect to be taxed on the income proportionally over three years.
• Check in with plan sponsors. Are your clients offering a well-diversified lineup with safety-focused options? Talk to them about how their employees may be motivated by more stable investment choices. And discuss plan design options to improve retirement readiness, such as managed account services, matching strategies and auto programs.