In Part 1 of Tips to Improve Retirement Readiness for employees, I touched on using quarterly Old Age Security (OAS) announcements as a prompt to think about the importance of saving for retirement.
While this is one simple tactic, there are others that when implemented as part of a plan sponsor's retirement plan communication strategy, the level of awareness, engagement and participation of plan members will increase in tangible ways.
Here are four best practice tips for improving retirement savings outcomes:
Understanding how each generation in the workplace feels about financial planning and saving for retirement, can lead to better tactics for communicating retirement strategies. Encouraging employees with the call to action that it is never to late to start saving for retirement has become a prominent message. Introducing practical retirement planning best practices will ensure increased participation rates and better retirement outcomes.
For help with introducing these tactics and others, please contact us. We're here to help so that you can focus on what you do best.
For many people, retirement seems so far in the distance that turning one's attention to it doesn't seem to make the list of priorities.
The thought of saving for retirement or spending even a few minutes a week thinking about how to ready oneself for a transition from work doesn't hit the radar screen until such time that retirement is often so close that people find themselves in a state of panic.
They haven't saved enough. There have been other objectives including: paying off a mortgage, saving for university or college tuition, contributing to their son or daughter's wedding, and paying off ongoing credit card debt. There are too many short term or immediate savings needs that retirement readiness generally takes a backseat. Yet the retirement milestone eventually rolls around for all of us. The shocking part is that it creeps up faster than any of us can imagine and when people finally do think about their life expectancy and do the math in terms of what they haven't saved, it seems like there is no way to make up the savings based on the time they thought they had available. The reality for many employees is that they find themselves in a position where they need to work longer or come back to work on a part-time basis to ensure they can afford retirement.
According to a recent CIBC poll, 59 percent of retired Canadians are carrying debt. Although the national average is 71 percent across all age groups, this type of debt for retirees (at 59 percent) is frightening. Paying it down on a fixed income in retirement becomes increasingly challenging. As employers search for ways to draw attention to the need to save for retirement, there are specific tactics to help remind employees in tangible ways.
Every quarter, the payment amounts for Old Age Security (OAS), Guaranteed Income Supplement Allowance and Allowance for the Survivor are reviewed to reflect increases in the cost of living measured by the Consumer Price Index. A simple trigger such as this quarterly OAS announcement can be a helpful prompt to remind employees to think about a time in the future that they've ignored and that they can't rely on government sponsored benefits to provide them with retirement security.
Of note, Employment and Social Development Canada says that payments will increase by 0.2 percent to $550.99 per month for the maximum benefit from October 1 to December 31, 2013. More information can be found at www.servicecanada.gc.ca. Currently, Canadian adults 65 years of age and older can earn up to $70,954 a year and still receive full OAS payments while seniors with incomes up to $114,670 receive partial payments.
When employees see the amount the could receive from OAS payments, based on how long they've lived in Canada since the age of 18, it doesn't take much for them to realize that they can't rely on OAS, or CPP/QPP for that matter, as the linchpin in their retirement savings plan and if they are carrying debt into retirement, the need to act now and change savings patterns becomes painfully evident.
In Part 2 of this blog post, I'll explore other tips to improve employee retirement readiness. In the interim, and for more targeted help with plan member communications about retirement planning or employee benefits, please contact us. We're here to help, so that you can focus on what you do best.
The month of October is a time when many of us look forward to celebrating Thanksgiving. It can be relaxing time for watching the leaves change colour, catching a football game or two, tasting freshly baked pumpkin pie or enjoying some tasty mulled cider with family and friends.
October also marks the 13th anniversary of Canada's Health Workplace Month (CHWM). This year's theme is "Healthy Minds at Work" featuring the connection between mental health as an important aspect of one's overall health. CHWM is presented by Great-West Life and is managed by Excellence Canada (formerly the National Quality Institute).
More than ever, there is a need to promote initiatives that support a psychologically safe and healthy workplaces. Accordingly to the Mental Health Commission of Canada, 21.4% of Canadians aged 20-64 are living with mental health issues or illnesses. Accordingly to the Canadian Mental Health association, approximately 8 percent of adults will experience major depression at some time in their lives and about 1 percent of Canadians will experience bipolar disorder or manic depression. Accordingly to a 2010 report by the Institute of Health Economics, Canada's private sector annual spending for mental health rings in at $180 billion for short-term disability benefits and $15 billion for long-term disability benefits. When it comes to related absenteeism, the costs to the private sector tops out at $6.3 billion. Given this statistic and the costs associated with mental illness for employers and our society, there is greater importance placed on the strategies needed to promote healthy minds in the workplace.
There are year-round resources available to employers looks for tips and tools to make their workplace physically and mentally safe and healthy. This month, the weekly themes include:
Week 1 - Safe Workplaces
Week 2 - Healthy Bodies
Week 3 - Supportive Workplace Cultures
Week 4 - Fun at Home and Work
For additional details, please check out www.healthyworkplacemonth.ca. Plan sponsors are encouraged to participate and register their weekly activities.
What are some practical tips you can implement for employees of any age or workplace environment? Accordingly to Homewood Human Solutions, taking time during a busy workday to relax and re-engerize is important to one's mental health. Their top tips for staying well at work include: deep breathing, freeze frame (envision a situation that is positive and beneficial), and meditation. Details about tips for taking time to relax at work can be found on the Homewood Human Solutions website.
For more ways to promote healthy workplaces, please contact us. We're here to help so that 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.