By Greg Pallone
No one really knows what workplaces will look like in the post-Covid era. What we do know is that employees are now experiencing extraordinary stress caused by physical, mental and financial challenges associated with the pandemic. And employees close to a planned retirement date are feeling even greater concerns, wondering whether they can afford to retire.
With people living longer and the market increasingly volatile, it’s challenging to know how to plan for retirement. For those already retired, government requirements for RRIFs were already not keeping pace with the demographic factors. That, along with the impact of the market downturn, low interest rates and continued volatility, has led many retirees to consider returning to work.
The good news is there are steps that employers can take to help members mitigate the challenges. Consider these best practices:
- Communicate broadly. Your employees are more comfortable with communications delivered via technology now, due to work-from-home policies during the pandemic. Leverage technology to reach your members more directly than ever before. Host town hall meetings, virtually or in person, to share updates to company retirement plans and advisory services. Offer online education about retirement saving and financial literacy. In addition, use best practices for managing retirement savings through the uncertainty, including:
- Review the risk profiles. Have employees reevaluate their investment profile to determine if they are comfortable with the level of risk associated with their investments. They may want to consider changes based on crisis-related market volatility or length of time until retirement. Money invested in a target date fund may not require any changes, but other kinds of investments may have become unsuitable over time.
- Consult with an advisor. Encourage all employees to find an independent advisor. A good advisor will have the familiarity with their financial situation and goals, as well as the knowledge and expertise to direct and support them.
- Stay the path. Remind employees to ignore the noise and drama of the crisis. Once they have made careful, informed choices, they shouldn’t abandon them without reason.
- Manage plan costs. Times of stress and uncertainty are appropriate times to review your offerings. Make sure your HR team is invested in the outcome, and task them with stewardship responsibilities. Special attention should be paid to managing costs and providing services of value.
- Take a conservative approach. Don’t panic. Although it’s important to review your offerings, it is best to make only conservative plan changes during times of stress and uncertainty. Introducing broad retirement benefits changes will upset both you and your employees. Many companies are concerned with their own survival, but the truth is that most companies will weather the storm. And whatever you do, don’t tamper with employee savings rates.
- Address the psychology of retirement. For many near-retirees, accustomed to arranging much of their social interaction around the workplace, retirement can seem like an end. Emphasize instead the benefits and possibilities associated with retirement, and help reluctant near-retirees shift their thinking toward the potential for new opportunities and growth.
- Focus on employee mental health challenges. Employees are returning to the office stressed and anxious. They are worried about their physical health, their finances and their families. These, and other worries, may impact their productivity. Employees may also be reluctant to consider retirement at this time due to uncertainty in the marketplace. It is essential to provide tools and resources to support your employees’ well-being and allow people to get the help they need.
Keeping the whole picture in mind is crucial. Anyone working in retirement planning knows that the account balance is only one piece of the retirement puzzle; financial advisors must also be coaches and counselors, friends and supporters. The most important thing is to provide opportunities for employees to deal with their stress and anxiety, either virtually or in person.
Contact your HUB group retirement advisor for ongoing guidance on retirement plans during the Coronavirus pandemic.