(This post is about a 4-minute read)
This years’ Sanofi Canada Healthcare Survey showed that benefit plan sponsors are dealing with many different types of challenges as they try their best to deliver high-value programs to their employees. Sponsors are on the lookout for low-cost, low-effort solutions where they can realize big returns; improving productivity, morale, and overall focus within their organizations. Backed by numerous scientific studies, and emerging as more mainstream in North American culture, mindfulness is a highly credible practice that workplaces can embrace to see profoundly positive rewards.
Wellness program fatigue
In recent years, the focus may have been on expanding or promoting services within the scope of formalized wellness programs. Various forms of discussion-based therapy, nutritional counselling, and exercise would have been touted as essentials to help an employee smooth the edges of life’s rough patches. While these are valid, proven, and practical, the Sanofi report revealed that engagement in these kinds of offerings was plateauing. It argued that it was time to put the brakes on trying to bring in more wellness bells and whistles.
Create a shift in culture
A better approach would focus on looking at the underlying beliefs, assumptions, attitudes, and behaviours that form the backbone of a company’s culture and introduce programming that would support the creation of a healthier, more pleasant environment that’s supportive and minimizes stressors. This is where mindfulness is quietly showing its strengths. Mindfulness programs that are endorsed by employers and work to normalize meditation and deep breathing techniques – two hallmarks of a mindfulness practice -- are seeing astounding results with a trifecta of positive physical, emotional, and psychological changes.
Start small. Share. Support
So how can an organization start down the path of incorporating mindfulness into their culture? It’s easy if they consider one of the fundamentals of mindfulness itself: paying attention to the present time and place. Start small and gauge interest, finding people who have already developed a personal practice and who are more than willing to share their knowledge as advocates. They will help introduce and model the principles. The potential for grassroots involvement is big if it has the right support from leaders and influencers within your company.
Introduce focussed and balanced breathing exercises at the beginning or end of team meetings. Share the science and results. Create space by inviting people to attend a short, five-minute group meditation session, at least once a day. Make work a safe place for people to recognize the need for balance and help them achieve it.
What are the gains?
When someone is mindful, they become more keenly aware of how they choose to interact with the world. They develop a better sense of how they process information. More importantly, they learn how they react to different sources of stress. Mindfulness gives them a chance to observe the direction that they naturally lean to when responding to situations. And consequently, they can make more thoughtful, conscious choices. This kind of insight comes with practice, and of course, a strong personal commitment.
When a business creates space within their culture to support mindfulness, they gain employees who feel more in control of their personal well-being. They will start to see reductions in interpersonal conflict because of reduced stress, increased empathy and higher degrees of emotional intelligence. Creativity, community and loyalty flourish. As the employee population becomes healthier all around from the shift in support of mindfulness in the workplace, these positives and others will begin to show up as better outcomes for benefits programs
Connect with usif you would like to discuss mindfulness at work or any other topic. We're here to help so that you can focus on what you do best.
(This post is about a 4.5 minute read)
Consider for a moment the many not-for-profit organizations you know of who rely on volunteers to help them get their work done. These volunteers are performing essential roles within our communities. According to thephilanthropist.ca, Canadians volunteer so much each year, that collectively, their time has been calculated to be the equivalent of a million full-time jobs. While funding challenges ensure there’s a steady demand for more volunteers each year, we also see a shift in the way that people participate: the definitions and recognition of volunteerism are evolving. However, the one thing that hasn’t changed is the time challenge some people face when they want to volunteer but just can’t fit it into their schedules. That’s where workplaces are uniquely poised to help and in the process, realize considerable gains in the areas of attracting and retaining talent, developing strong and healthy workplace cultures, and cultivating increased productivity and profitability.
Wanting to volunteer, but juggling too much day-to-day
A 2017 Ipsos summary report on volunteering commissioned by Volunteer Canada, showed that a majority of Canadians (65%) feel, “they have a responsibility to those who may need help in the community.” The study found that a significant number of people (57%) say that they don’t have time to fit volunteering into their existing obligations. It may be that people are finding it more difficult to engage with their communities these days, or that within the activities they are involved in – anything from school activities to little league, to community theatre – more often than not, volunteering is mandated in a way that is turning it into more of a chore that doesn’t feel right. Time crunches mean that people are looking for opportunities to fulfill their volunteer aspirations as part of what they achieve through their employers, especially those that have formalized social responsibility and volunteerism programs. In fact, “68 percent of Canadians…said that, given the choice, they would choose a job with a company that has a strong volunteering culture over one that does not.” Further, employees who can volunteer either as part of a team-based activity or who individually, are sponsored by their employers, report feeling a greater sense of loyalty and pride in their workplaces over time.
Employers who support volunteering are highly prized
While Canadians want their employers to organize volunteer activities because it’s a perk of working for a great company, for workplaces this expectation is not just about giving people time off to participate. Companies who have well-defined goals and protocols around volunteering and frame the terms of engagement but also offer flexibility and choice of how their employees can volunteer are increasingly becoming more attractive. It’s a win-win situation. There is often a good mix of events – anything from walks and runs for great causes to healthy competition between rival companies for donations. However, there are also many quiet, more individualized opportunities, such as spending time helping people learn how to read. The bottom line is that for both participating companies and employees, they receive recognition and are well-regarded in their communities which in turn promotes a great sense of accomplishment and belonging.
Walking the talk, how we get involved
Our own office looks for opportunities to get involved in the community regularly. For instance, we participated in a team activity at the Ottawa Food Bank sorting donated food to prepare it for those in need. Our employees were enthusiastic and asked many questions about the Food Bank to get a better understanding of how it fits as community support. The time we shared was overwhelmingly positive, and people wanted to bring their children back to volunteer as well. The team felt they had made a difference and was eager to volunteer again. As an employer, we were thrilled. We provided a chance for employees to learn, putting their skills to work to help an organization who needed their time and labour.
One of Gallagher’s volunteerism goals is to have our employees give back to the community. This activity did so in spades since employees felt good about their contributions and so many of them also indicated that they wanted their families to get involved. It was a case of Gallagher giving back, but our employees paying it forward too.
There are a lot of gains for employers too
Employers are seeing sustained positive benefits of volunteer activities back in the workplace. Employees are feeling refreshed, more connected to their co-workers, happier and more engaged. They’re working harder and being more productive. Results show increased employee engagement. People are coming back more focused and reinvigorated. They are learning new skills, trying things that aren’t naturally part of their roles at work, and thinking differently about their jobs with a fresh perspective. Given all the positive returns, it’s good business to get involved!
If you have questions about how to get started with your volunteering program, feel free contact us. We're here to help so that you can focus on what you do best.
(This post is about a 4-minute read)
This year’s Sanofi Canada Healthcare Survey (SCHS) results revealed some familiar themes and invited readers to sit up and take notice. Now into its second decade, the longest-running annual survey of health benefits took shape as an online survey, with over 1500 plan sponsors responding between January 2nd and 9th. The overarching message, about making connections between many different aspects of health care plans is timely, with a significant proportion of sponsors feeling challenged to administer their plan’s day-to-day activities and “look beyond costs and make connections with organizational health” (SCHS, 2018, p.32). It goes on to explain the state of health benefits plans on four planes: current state, disease awareness, wellness, and evaluation.
The first strand paints a picture of what the current focus and the current state of health benefits plans is. Plan sponsors continue to focus on cost management, seeking comprehensive, yet affordable and sustainable coverage from insurance partners. At the same time, they are trying to address several equally tricky issues that are competing for time and attention. It’s a quest to get members to revere their coverage as both highly valuable and high quality by fine-tuning plans with the right combination of features – ranging from flex choices to wellness programs and Health Spending Accounts (HSAs).
The next focus for the survey turned to how health and chronic disease awareness are informing and influencing some of the critical ideas, discussions and decisions that plan sponsors and plan members view as important. The effect these conditions afflicting the workforce are having on workplaces is palpable. There’s a recognition on the part of both sponsors and members that much more must be done, and quickly. Interestingly enough, members now seem to be less reluctant than in previous years to look for help from sponsors. This could be an indication of a slight nudge in reducing the stigma associated with management of mental health conditions for instance, or a renaissance in recognizing the potential power of health information can be harnessed for a greater good. The key takeaway is that examining data with a different, holistic and integrated lens should be the next evolution in data management for sponsors. It will take innovation and cooperation between carriers and advisors to make this a reality, but the first to do it will up the ante for everyone else.
The survey then turns to an examination of trends in workplace wellness programs, making the bold statement that wellness programs and wellness culture must coexist. It weighs the importance of one versus the other, and lands in a surprising place based on some interesting trends being revealed in the data. The message to, “start with the ‘wellness culture’ of the work environment before considering changes to the health benefits or implementing wellness programs” is sage advice for organizations of all sizes (SCHS, 2018, p.32).
Lastly, we see how having a set of clearly defined long-term objectives for health benefits plans, as well as several short-term goals, correlates with increased value rankings when plan sponsors conduct reviews and evaluate their programs. It’s a leading practice that’s work a look.
Real stories, real solutions
One of the most compelling parts of this year’s survey are the case studies that share experiences and perspectives, offering new ideas for advisors, insurers and sponsors to contemplate.
For instance, a “Closer Look” on Drug Costs – which still dominates as the most utilized coverage category – points to some interesting trends that are expected to continue. It seems that drug cost increases may actually be levelling off. Looking at the data, the narrative we’ve been hearing for many years around how “higher-cost specialty drugs” are pushing expenses higher is giving way to a new culprit: more claimants who file more claims. In fact, it’s this factor that has “accounted for 75% of the growth” of drug costs within benefits programs in recent years (SCHS, 2018, p.10). There are similar examinations of osteoarthritis, adult vaccinations and heart disease.
“Employer Profiles” give us a further glimpse into some of the challenges and innovations that these featured companies are working to solve. The stories are shared with transparency and help kickstart thinking and actions for readers to take. For example, one small employer shared how by partnering with a provincial government association inspired the introduction of a low-cost, volunteer-driven wellness initiative. Another looks at the experience of an industry player who initially offered a subset of its 47,000 employees the chance to participate in a pilot project on sleep health. The success of that pilot showed the value in the results, and they’ve determined that the return on their investment benefitted not only the participants but made great strides in addressing absenteeism.
As in past surveys, the advisory board offers a final informed synopsis with their experienced and skilled insider views leading to thoughtful interpretations of the results. This year, it’s a list of the Top 10 Calls to Action for providers and sponsors.
One of the reasons we like this survey so much is because it represents the voices and opinions of so many plan sponsors across the country. As a benchmark, we can have discussions with plan sponsors about their own programs and reflect on whether they are experiencing similar events. We’d be pleased to book time to review these calls to action in the context of your own benefits program.
Contact us. We're here to help so that you can focus on what you do best.
Link: The Sanofi Canada Healthcare Survey, 2018.
We all know we need to get up and move to stay healthy, but with the pace of work these days, it can present a real challenge for the average person in their workday. One of the best ways to improve physical and cognitive health and well-being, plus give productivity a pick-me-up is to take advantage of beautiful weather and get outside!
Despite the popularity of fitness trackers, pedometers and mass PR campaigns about getting in your 10,000 steps a day, a multitude of studies show that in reality, office workers move very little during their 8-hours at work. In fact, the average seems to fall in the neighbourhood of between 3000 and 4500 steps. With busy families and other commitments outside of work, it seems that despite our best efforts, not all of us are able to make it to the gym regularly.
So, how much should we be moving?
The Public Health Agency of Canada recommends that adults between the ages of 18 and 64 get 150 minutes – or 2.5 hours -- of moderate-intensity aerobic activity each week. We shouldn’t feel overwhelmed that we have to do it in one session either. Every minute of movement counts. In fact, it might be easier to break it up into shorter ten-minute segments.
Let’s also clear up what constitutes moderate-intensity aerobic activity. The Agency states that “Moderate-intensity aerobic activity makes you breathe harder and your heart beat faster. You should be able to talk, but not sing.” (Government of Canada. Physical Activity Tips for Adults 18-64.) That means that walking, bike riding and skating are all good.
Movement benefits the general health of our entire bodies and addresses looming health risks of chronic conditions like diabetes, heart disease and dementia. But we’re obviously conflicted about focusing time to get in our RDAs – that is, recommended daily activitie
A prescription for your health doesn’t have to be a tough pill to swallow
One way around our sedentary tendencies might be for physicians to write out prescriptions for exercise, not just medication, as part of an official treatment plan. People tend to fill their prescriptions because they’re written with authority – often to improve or even save lives. Following your doctor’s orders, as prescribed, takes on new meaning. It could be a wakeup call for some who may have been content in the past to share that their doctor has said they should take better care of themselves. Shifts in commitment and better results show that this may be one of the most effective strategies to use to change behaviour.
In the meantime, before you ask your doctor for a prescription, think about a few of the ways that you can easily find ways to be more active during your workday. Walking is one of the best forms of activity that that gets full marks for being able to be done in short intervals and with little to no equipment. All you need is footwear to start. You can add a refillable water bottle to the list to keep you hydrated along the way. And if you wanted to infuse some hi-tech, you can always look at fitness tracking, either through an accessory or via an app on your mobile device.
Walk and talk
Getting active for as little as ten minutes at a time provides cumulative benefits over the course of a day. It aligns perfectly with the time you might take for a coffee break – but the boost you get is from the exercise, not the caffeine and snack that may have formed part of your routine before. You’ll also have greater success in the long run if you start small. Once you notice your body responding, change up your new routine by increasing the frequency, intensity and duration of your walks.
Parking at the back of the lot, reserving time in your lunch break for a short walk after you’ve finished eating, or even inviting your colleague to a “walking meeting” – inside or outside – these are all ways you can easily step-up to challenge yourself to get more active during the day. Whatever you do, use a calendar to keep a record of your activity. It will make you more aware of what you need to do the commit to making a change.
If you have questions about this topic or what can be done to manage your benefits program better, please contact us. We're here to help so that you can focus on what you do best.
There are costs associated with every aspect of running a business, whether for profit or not. Management gurus, Peter Drucker and Tom Peters, are quoted as saying, "What gets measured, gets done." Yet organizations still struggle to quantify aspects of their business that drain resources like a bucket full of holes.
With stress and anxiety levels increasing and people's decisions about financial, physical and mental health struggling to be a top priority, employers increasingly feel the effects of presenteeism, absenteeism, disability in the workplace. Measuring the cost of chronic conditions in the workplace is a method for understanding the drain, weighing its importance, and giving it the prioritization it requires.
What is a chronic condition?
By definition, a chronic condition is an illness that continues for a prolonged period (more than one year) and requires ongoing monitoring or treatment. Chronic conditions include high blood pressure, asthma, anemia, diabetes, heart disease, arthritis, mood disorders and cancer.
According to the Centers for Disease Control (CDC), there are four major health risk factors that contribute to chronic conditions:
1) lack of exercise;
2) poor nutrition;
3) tobacco use; and
4) excess alcohol consumption.
The more employees are educated about these factors, the greater the likelihood that healthcare costs have a chance of being effectively managed. Without awareness and preventive steps, the greater the propensity that chronic conditions and their associated costs will increase.
What to measure.
While this list is by no means exhaustive, it offers potential quantifiable metrics for employers to measure:
With an aging workforce and the rise of chronic disease prevalence, there has never been a better time to focus on maintaining a productive, healthy and competitive Canadian workforce.
Working with a trusted employee benefits advisor can help you measure and manage the healthcare costs associated with chronic conditions. We invite you to contact us to discuss this topic in more detail. As always, we're here to help so that you can focus on what you do best.
Financial problems don't seem to discriminate against whom they decide to trouble. Worries about money are sited as the number one source of stress for Canadians. After the economic downturn and lessons post 2008, financial education has a long journey ahead given more than 68 percent of Canadians report worrying a lot about their financial situation. It causes us to lose sleep, become distracted at work, as well as lie to ourselves and others regarding the degree of our worries, spending habits and state of our financial situation.
Who's stressed about money?
According to a survey conducted by the Financial Planning Standards Council (FPSC), women worry more than men about financial stress. Contributing factors that influence their stress are attributed to women living longer, earning more and becoming more involved as the primary manager of household finances.
Regrets, we have a few.
This same FPSC survey revealed that 87 percent of Canadians wish they had made better financial decisions. Top money regrets listed are wishing we'd:
- saved more or started saving earlier;
- invested more, earlier or wiser;
- spent less;
- bought a house, condo or property; and
- acquired a better education.
Who lies about money?
Now that Millennials represent the largest demographic in the Canadian and US labour force, this powerhouse cohort finally overshadows Baby Boomers who were the primary workplace influencers for the previous few decades. As per the FPSC survey, Millennials are more likely than any other generation to lie about personal finances with 33 percent admitting dishonesty with friends, 25 percent to family and 15 per cent to coworkers. The national average reports 17 percent as being dishonest about money to friends, 14 percent to family and 9 percent to coworkers.
Who has a financial plan?
The results of an FPSC international board global study of 19,000 adults in 19 countries, including Canada reveal that young people (at 37 percent) are more likely to have a financial plan than those over age 50 (at 27 percent).
Why do Millennials plan more? With frequent job changes more the norm and less likelihood of being part of a defined benefit pension plan, this cohort might feel more pressure to plan and save.
Stepping stones to financial health
Increasingly, there is a need to educate and inform Canadians about the value in taking greater accountability for their financial future. While it might be tedious to put together a financial plan or stick to a budget and pay down debt, these priorities can become more top of mind if information, tools and support is made readily available.
....At work, you say?
Where better to provide and share financial literacy tools and resources to help employees understand the importance of addressing financial priorities such as building emergency funds, being credit-card and/or line of credit debt free than where they spend the majority of their daily waking hours -- at work.
While some employers stick to providing resources to inform about education savings or inheritance planning, stepping stones to financial health start with the basics, an area of financial literacy that many Canadians have yet to embrace and champion.
Start with money management.
According to a survey by Interac Association, Canadians have a list of financials goals, but have difficulty with money management preventing them for reaching these goals. While they'd like to repay loans, purchase a vehicle, pay off a mortgage and save for their children's education, many don't have as little as $2000 available in their emergency or rainy day fund.
Keep in simple and stick to the basics
1) Offer resources, online or otherwise to help employees examine their spending habits monthly and create a budget they can get behind and stick to.
2) Consider credit free challenges and best ways to save money. Help make talking about finances safe and stigma-free.
3) Offer access to a certified financial planner who will work with employees to create a financial plan that's tailored to their financial situation, needs and goals.
4) Remind employees about how to use their benefit plan wisely and regularly share information in tangible, plain language. Explain in easy to understand ways why saving for their retirement while paying down consumer debt can and should happen simultaneously.
Increasing pension plan participation rates and topping up employer matching might be the overarching goal from a corporate perspective, but often, and especially when it comes to finances, we benefit most from remembering to walk before we run. This means keeping the basics of financial planning and developing skills to deal with conflicting financial priorities at the strategic and communication forefront.
Building the stepping stones for success is something we'd love to explore with you as we tailor a plan to meet your specific needs. We invite you to contact us today. Whether it involves your human resources strategy, benefits plan or retirement savings program, we're here to help so that you can focus on what you do best.
As part of financial education in the workplace, there tends to be a greater emphasis on the accumulation phase of saving and less so on how to approach decumulation. With the Baby Boomer wave shoring up thousands of new retirees on a daily basis, strategies to convert savings into income that lasts a lifetime are more important now than ever before.
There are financial education opportunities that are far less understood and warrant some time in the communication spotlight. A topic that rarely get promoted is when to start Canada Pension Plan (CPP payments).
Bringing our Canadian retirement system into context means considering three distinct pillars:
1) Federal government programs (CPP, Old Age Security and Guaranteed Income Supplement)
2) Personal savings - Registered Retirement Savings Plans (RRSPs), Tax Free Savings Account (TFSAs) and other non-registered account, personal equity, home and vacation properties and equity in business, inheritances, etc.
3) Workplace pension programs.
CPP quick facts.
CPP is part of the federal government program. It proves a basic retirement income up to a maximum of 25 per cent of the Year's Maximum Pensionable Earnings (YMPE).
In order to receive the full retirement benefits, the normal retirement age for CPP is considered age 65. Canadians who've contributed to CPP and are entitled to receive a payment can start collecting as early as age 60, but they must start receiving CPP no later than age 70.
Anyone who starts receiving CPP before age 65 is penalized with a reduction in monthly payout. For each year a person defers receipt of CPP payments, they receive 8.4 per cent more annually to a maximum of a 42 percent increase in their CPP payment at age 70.
Is a bird in the hand better?
While there appears to be financial advantages to deferring CPP payments, many Canadians are reluctant to do so. This is due to what is called the bird in the hand attitude. People believe it is better to have the money now. They also worry that if they defer CPP payments, there won't be any federal money left for them if they wait too long.
Questions worth asking.
When to start CPP payments really depends on individual preference, comfort level, health status and wealth accumulation. For those not sure when to start, here are some questions to narrow down the right time:
1) Are you planning to work past age 60 and if so, for how long?
2) a. Is there a phase of your retirement when you believe you'll most enjoy having more money available? Chances are that people are their healthiest soon after retirement and as they continue to age, the chance of health deterioration increases.
There are three phases to retirement called:
1) The go-go years - when you're most active. Will you need extra cash that early CPP payments will provide?
2) The slow-go years
3) The no-go years - are you worried your funds will run out and deferring your CPP payments will help bridge you during this period of your life?
2) b. Consider your life expectancy while factoring in your personal health situation and family history.
3) What will taking CPP early cost you? There are some easy and free online early CPP calculators available including: the Government of Canada, and Tridelta. Doing some easy math to analyze the financial impact of taking CPP early helps with monthly income projections in retirement.
A lot to consider.
When to start CPP payments really depends on the person asking the question. Helping them walk through the process by providing important questions that facilitate insightful responses may make it easier for them to decide where to go from here. We're fortunate to have the freedom to choose when to start CPP, but for those worried about ensuring their savings last a lifetime, selecting the right time is key.
Questions about when to start CPP payments will continue to increase and we want to ensure you're well equipped to address those questions as part of your workplace pension program communication strategy. We invite you to contact us. We're here to help so that you can focus on what you do best.
By the year 2020, Millennials will represent 50 per cent of the global workforce.
Who are Millennials?
Millennials or Generation Y represent a demographic cohort born between 1980 and 2000.
There are many stereotypes for Millennials with comments ranging from tech-savvy, educated and energetic to entitled, disloyal and cynical.
Generalizations can be harmful and it isn't a safe bet to broad brush the characteristics of a generation, especially when developing a benefits communication strategy. However, there are some common traits relevant to Millennials that include:
1) a strong feeling of online connection
2) an interest in teamwork
3) a heightened need for choice and control
4) a greater use and comfort with social media, video, online interactions and text messaging.
While these traits may take precedence, it doesn't mean they don't value face to face communication, especially for complex topics or where a series of questions may result.
Regardless of the medium, this generation has a strong appreciation for accurate, straightforward and current messages that are easily digestible and void of corporate spin or jargon.
Do Benefits Matter?
According to a recent report by Ebix Consulting, 49 per cent of Millennials said their employee benefits were a strong driver of financial security and peace of mind. Knowing that benefits matter also requires a keen understanding of this cohort's communication style preferences.
Here are some tips to consider when developing benefit and pension plan communications for Millennials:
1) Make it easy. Make it accessible.
Mirror the experience they have when accessing information in their personal lives. Don't make it difficult to source plan information. Feed them vital communications through their preferred social media channels throughout the year.
2) Make it fun. Make it transparent and real.
Think about how you'd communicate with a friend. Apply appropriate humour and disruptive quirky messages to catch their attention and engage them by keeping it real. Avoid corporate spin particularly if the message may be difficult or seen as a benefit takeaway. Just explain the reason for the change without any spin.
Regardless of generational cohort, revisit communications with a plain language filter. Keep to a Grade 8 reading level or lower and avoid acronyms or legal terms.
3) Keep it short. Make it current.
Limit the amount of text so that it is easily consumable and not overwhelming. Consider adding hyperlinks and scrolling news feeds as well as short articles and videos.
Keep messages timely and revisit as appropriate using other Millennial communication channel preferences. People have limited time and attention spans for benefits communications so don't let your approach make it hard to get your message across effectively.
4) Show all options. Feature flexibility.
Make it clear what benefit plan options exist and how to find more information easily.
5) Invite participation. Start a conversation.
Give the audience an opportunity to participate and have a say. Demonstrate the importance of their ideas and opinions. Create short, fun surveys with humour and irony -- similar to what they use outside of work (Think of the style of quizzes on Buzzfeed.com)
No matter the generational cohort, benefits communications are better served when their target audience is understood and messages are tailored to resonate effectively with them.
Leverage our experience.
An important overall goal for any benefits communication is to create positive and effective messages that reach their intended audience. Creating confidence in the desired call to action, behaviour change, awareness campaign or knowledge transfer is best served when messages, regardless of medium, help employees understand, appreciate, and use their plan(s) wisely.
We have decades of experience communicating to employees of every generation under our belt. We're excited to share our best practices with you. So please contact us. We're here to help so that you can focus on what you do best.
Retirement readiness is an important part of financial wellness yet many people approach retirement feeling ill prepared and often realize too late that planning for such an important financial milestone was something they should have paid greater attention to earlier in their working lives.
What is retirement readiness?
The DC Institutional Investment Association's Financial Wellness Task Force (DCIIA) defines retirement readiness as varying by individual and based on:
- his or her goals and needs in retirement;
- wealth outside of the retirement plan;
- ability and desire to generate income in retirement years,
and other factors such as longevity.
A lack of employee retirement readiness costs employers
The reasons employees benefit from being retirement ready are pretty easy to understand and appreciate. What about from the employer's perspective? When employees don't feel they have the financial freedom to choose the ideal time to retire, there is a stronger tendency for them to stay in jobs that disrupt the natural progression of the workplace. The greater the number of older workers, the greater the propensity to experience increases in the cost of salaries, health care, worker's compensation and disability.
As per the DCIIA's Financial Wellness Task Force, retirement readiness is critical for an employer to appropriately manage its human capital. Additionally, an employer's approach to educating about retirement planning can help attract and retain employees, but also manage the cost of its workforce.
With more than 10,000 Baby-boomers turning age 65 on a daily basis, the topic of retirement readiness takes centre stage. The question remains, who is financially ready to retire?
Who's ready to retire?
Prudential's report, Do You Have a Good Sense of Your Retirement Readiness, indicates that more than 43 per cent of Americans inaccurately assess their retirement preparedness. Their inaccuracy can go either way -- perhaps worrying too much or not enough.
In an annual human resources study conducted by Morneau Shepell Ltd in July 2017, the results from questioning 370 employers across Canada revealed that over 90 per cent of HR leaders worry about employees' level of retirement preparedness. This concern was greater for those participating in defined contribution rather than defined benefit pension plans.
In New York Life's Financial Stress and Retirement Readiness Report, 73 per cent of respondents reported feeling moderate to extreme financial stress over the last 6 months and 60 per cent said they were behind or far behind schedule in their saving for retirement.
How do you assess retirement readiness?
According to Sibson Consulting's report, Quantifying Retirement Readiness, assessment factors include three typical metrics:
1) Replacement ratio -- this ratio is the required income for retirement as a percentage of income just before retirement. This is often represented as a ratio of 70 to 85 per cent of pre-retirement income (including government sponsored programs such as Old Age Security and the Canada or Quebec Pension Plan). Many assume age 65 as the most common retirement age.
2) Wealth accumulation target -- this is the total savings an employee needs to carry through the length of their retirement. For example, if an employee retires at age 65 and aims to replace 85 per cent of his income, he needs 11 times his final pay. The target amount decreases for each year the employee pushes back his retirement date.
3) Retirement readiness grade -- this is a grade given to employees to track their financial preparedness and retirement readiness progress.
There are many reasons why employers are incorporating educational components specifically related to retirement readiness into their wellness programs, financial literacy campaigns and pension plan education workshops. When employees are stressed and anxious about their financial present and future, they tend to be less productive and more distracted at work. Lapses in quality are linked to customer satisfaction. When these decrease, the risk to a company's bottom line may also be compromised.
Taking an intergenerational approach to supporting retirement readiness for all employees is something we're keen to talk to you about. We invite you to contact us. We know that helping employees confidently save for their goals including retirement benefits the employer too. We'd like to explore options that are best suited to your workforce needs. As always, we're here to help so that you can focus on what you do best.
The Baby Boomer wave continues to take us globally by storm with every generation experiencing the effects of its age-related trends. The latest Baby Boomer wave sees those born between 1947 and 1962 facing the crest of retirement. In fact, 25 per cent of Baby Boomers will be age 65 or older by 2030. In the U.S., those over age 85 represent the fastest growing demographic.
We're living longer.
We're living longer than any generation before us. Around 1900, if you were age 65, you might expect to live another 13 years. Fast forward to the year 2000, and if you were age 65, you could add an average of 20 years to your life span, a 7 year increase in 100 years.
So why are we living longer? Advancements in technology, medical practices and procedures, medical resources available online as well as people choosing healthier lifestyles means our average life expectancy continues to increase. So much so that the statistics about centenarians is astounding. As per Statistics Canada, the growth in our centenarian population -- those who reach age 100 -- is larger than the growth in our population as a whole.
Post age 65, Canadians are told they might expect to live at least 25 to 30 years and that they should be saving for a retirement with that type of long range trajectory. The challenge is that you just don't know how long you'll live. It is as if you've been asked to swing a golf club and hit the ball onto a green but you can't see the pin and you have no idea how far away the hole is. What club should you pull from your bag? A driver or a 9 iron? What is the safest play?
This is a 'saving for retirement' challenge. While you don't know how far in the distance you will have, you can anticipate, based on family history and current census and longevity stats, how long you might have.
Preparation and Education
Whether in Canada or the U.S., research and surveys remind us that we're not saving enough. In fact, the average 50 year old American has just over $50,000 in retirement savings. Closing the savings gap is key, but how can employers help?
Education and preparation are some of the best ways to empower and inform employees who haven't given much thought to their financial future beyond retirement. Here are a few tips to explore:
1) Picture yourself in the future. A good way to do this is to have employees actually envision their retirement and what they will do in their post-working years. What kind of funds do they think they will need to access annually? The more real the retirement scenario becomes, the more a person thinks about retirement needs in more practical terms.
2) Use online free calculators. Many financial institutions and financial advisors offer free online withdrawal calculators. These calculators help you determine how much you'll need to save and how long before your investment income runs out. I've included a some websites with free investment withdrawal calculators for your reference: (Note, I'm not endorsing any of these sites)
3) Estimate how long you might live. Make it real for people to consider this question in terms of their savings plans or lack thereof. There is a free online resource from Hargreaves Landsdown, a British firm that offers a longevity calculator. It is a simplified approach, but possibly effective nonetheless It asks only for your gender, year of birth, and expected retirement age before calculating your "guestimated" life span post retirement.
While these three ideas simply focus on the concept of longevity, the topic is more involved and warrants a deeper dive. We'd like to expand on this topic and its related issues with you. We invite you to contact us. As always, we're here to help so you can focus on what you do best.
Dave Dickinson, B.Comm, CFP, CLU, CHFC
Experienced Benefits Specialist ready to optimize your group benefits and pension plans.