How Workplace Financial Education Solves the Retirement Saving Crisis

This is an updated version of a post that first ran at

Financial education at work is the missing ingredient for millions of employees that are unsure of their path to retirement, according to a recent report from BlackRock. The findings underscore the need for workplace financial wellness programs-and where they already exist, for employers to do a better job of conveying the value of these programs to employees. When people near retirement, they need to know how best to handle their finances and what they are going to do with them later on in life. That is why they may turn to an estate planning lawyer in Denver, or wherever they are based, so they can set out a plan and have peace of mind about where their money is going.

BlackRock, an investment firm with nearly $5 trillion under management, surveyed 401(k) and other defined-contribution plan participants. It found 52% believe they are on track for retirement. Another 28% say they are unsure if they are on track-and many in the unsure camp could gain confidence by taking simple steps laid out in most financial education programs.

For example, 66% of those unsure about retirement say they don’t know as much as they should about investing. That compares to just 38% of those on track. Likewise, 68% of those who are unsure of their path say they don’t know how much money they will need to fund home care packages or their other retirement plans. That compares to 32% of those who are on track.

For a great many, then, moving towards retirement confidence is a fairly simple matter of learning more and doing some math. This is not string theory. Even basic financial wellness programs lay out the simplicity and effectiveness of directing all assets to a target-date mutual fund. They also make it simple to decode a worker’s savings needs through online tools like Vanguard’s retirement calculator.

“Our survey shows that taking a few simple steps with a DC (defined contribution) plan can make a considerable difference for successful retirement preparation,” says Anne Ackerley, head of BlackRock. “For many participants, moving from retirement uncertainty to confidence is a matter of education and resolve.”

But here’s the thing: Those who are unsure about their retirement prospects are far less likely to seek answers, BlackRock found. For example, just 43% of the unsure take advantage of employer-sponsored financial education programs and use the information they gain from them to prepare for retirement and apply for state-provided medical programs like Medicaid (presumably with the help of a medicaid consulting firm). That compares to 67% of those who are on track.

“Plan engagement is a key vehicle for boosting retirement confidence, and that’s a critical message for plan participants and sponsors alike,” says Ackerley. “Individuals need to take greater advantage of the tools already available to them through their plan. And plan sponsors can feel confident that adding more and better tools for their DC participants is a worthy effort.”

As financial wellness programs at work proliferate, workers must make better use of this important resource-and employers must not only offer them but convince workers of their value.

Posted in Adults on October, 2016