Data & Research January 31, 2018

Empower Finds Projected Retirement Income Feature Engages Participants

Over a six-year period, projected income replacement scores in plans managed by Empower increased from 68% to 77.8%

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As known within the retirement industry, retirement saving can be a laborious duty for participants. For plan sponsors and advisers, urging employees to take action towards retirement planning can be an even tougher debacle.

Due to a lack of retirement planning emphasis found in solely predicting and eyeing account balances, Empower Retirement altered the attention to present an estimated monthly income replacement in retirement for participants.

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Started in December 2010 and conducted through September 2016, Empower studied participant savings outcomes upon introducing predicted monthly retirement income, and found that employees in their plans are likely to save better and have higher engagement. Before implementing the new approach, Empower would present participants with an accumulated balance of assets to show retirement savings. According to the company, the change began when Empower started utilizing both the monthly income replacement rate and accumulated balance forms, after the idea of a monthly income rate for participants was created.

The study shows that when individuals view their projected monthly income in retirement, those who take action increase their savings rate by 8% (7.07% to 8.4%), on average.

To add a more holistic view on retirement income, Empower then added a health cost estimator and a peer comparison feature, including using web sessions for participants.

Those who gained insight on health care costs in retirement saved more in order to meet their expense goals, with a 22% increase in deferral rates (8.64% to 10.54%). In addition, peer comparison was a great motivator. Individuals  presented with data that shows how much their peers are saving and have already accumulated made an average savings increase just under 22% (7.8% to 9.49%).

Overall, the study found that over a six-year period, projected income replacement scores in plans managed by Empower increased from 68% to 77.8%. Participants over the six-year period were 30,000 employees from 569 of Empower’s retirement plans, with each using Empower’s Participant Experience feature. 

Data & Research January 31, 2018

Asian Americans Could Use Financial Guidance

While nearly half of Asian Americans surveyed defined their American Dream as being financially secure, most get financial guidance from family and friends.

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Nearly half of Asian Americans (44%) defined their American Dream as being financially secure, second only to having a happy family life (47%), according to a Northwestern Mutual survey.

To achieve financial security, respondents cite saving money (62%), spending wisely (58%), paying down debt (51%) and having a solid foundation of financial literacy/understanding (49%). However, family and friends are among the top sources of financial advice and guidance—parents (34%), friends (30%) and partner/spouse (28%).

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Having peace of mind regarding one’s financial situation was the greatest indicator (29%) that one is financially secure, according to respondents. This was followed by maintaining standard of living through retirement (20%) and being free of debt (15%).

“These results indicate the importance of saving among Asian Americans, as it enables them to feel prepared and confident when approaching each stage of life,” says Vivian Chen, director of Asian market strategy at Northwestern Mutual.

The online survey was conducted last October and November among 501 Asian Americans.

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