5 Ways to Refresh Participants’ Retirement Outlook During Open Enrollment

Open enrollment season: For participants, it’s the time of year when they’re most engaged with their financial benefits. For plan sponsors, it’s a chance to re-evaluate what’s working for employees and what’s not. It also could be the perfect opportunity for engagement and education. Here, we review 5 strategies that could drive better outcomes for your participants.

  1. Be Ready with the Right Message at the Right Time
  2. Offer Advice Outlets
  3. Run a Re-enrollment Program
  4. Facilitate a Financial Wellness Program
  5. Evaluate Retirement Income

Danielle A Gladstone

1. Be Ready with the Right Message at the Right Time

Information is best received when it’s relevant to the audience. A period of change – like open enrollment – is prime time for engagement and intervention because benefits are top of mind.

Plan sponsors should take this opportunity to refine and recommit to messaging goals by choosing one or two areas of emphasis, such as boosting savings rates or increasing plan participation. A more narrow focus can lead to greater clarity in messaging. Establish a goal and tailor the tone and emphasis of the content by participant segment. Bonus points if you have specific plan features that might help with the goal. For instance, if the goal is to boost savings rates, and your plan has an opt-in auto escalation program, communicate its value and provide easy steps on how to sign up. Finally, consider segmenting the audience based on behavior to allow for goal-specific messaging. For a savings campaign, segmentation could include:

For: Focus on:
Participants not getting the full match Actionable content encouraging participants to save more to get the full match
Participants not enrolled in an auto-increase program Adoption of auto-escalation and enable participant inertia to have a positive impact
Participants above the match but not at the federal limit Communicating the benefits of a 1%-2% increase; include an interactive calculator to show how a small increase can have a meaningful impact on balances at retirement

By focusing on one or two behavioral goals, sponsors can break information down into digestible and actionable items and reiterate certain plan features of which participants are unaware or not taking full advantage.

Keep messaging clear and simple. For more tips on how to create engaging and effective participant communications, see our Communications Best Practices guide.

2. Offer Advice Outlets

Open enrollment is often a time when participants are required to make a decision regarding their benefits. When it comes to retirement planning, many participants rely on financial experts to develop a long-term strategy that’s right for them. State Street’s 2018 Global Retirement Reality Report surveyed over 9,400 savers and retirees across the world to gain insights into and understand gaps between retirement expectations and realities. As part of the effort, retirees were asked what advice they would give current savers. The responses were uncannily consistent:

  • 88% said save early and benefit from compound interest 
  • 71% said save more, if possible
  • 68% said seek professional advice sooner

In the US, the topic of advice was fraught, as many responders looked to their employers for guidance, but very few had a satisfactory experience. Given the expressed demand and importance, sponsors should consider avenues for their employees to access one-on-one financial counseling.

3. Run a Re-enrollment Program

Choosing the right investments can be overwhelming for a participant. Both inertia and lack of knowledge present significant hurdles –and create plan pitfalls. For instance, if participants don’t properly apply diversification or rebalancing strategies to their portfolios, they could be taking on an inappropriate level of risk and negatively affecting their investing outcomes. A re-enrollment campaign that sweeps employees back into a default strategy, like target date funds, can greatly benefit those whose risk profiles don’t properly align with their age. Re-enrollment can harness that lack of decision-making by making participation an opt-out experience; in which case, inaction translates into a well-balanced savings strategy.

4. Facilitate a Financial Wellness Program

Financial stress can significantly affect an individual’s physical health and workplace performance. This issue is particularly pressing given that more than 67% of Americans say they are somewhat or even extremely anxious over the state of their finances, according to a 2018 poll conducted by the American Psychiatric Association. As employers are often seen as a trusted source of financial information, and have a vested interest in employees’ productivity, organizations might consider building out a financial wellness program. For those sponsors looking to get started, we’ve created a six step framework to help introduce a program into your workplace.

For a tangible example of what a financial wellness program could look like, check out our Savings Bootcamp Guide, a financial wellness concept inspired by physical fitness programs.

5.  Evaluate Retirement Income

To date, retirement planning has focused on the saving phase. However, there is an equally critical spending phase, for which solutions and strategies are less clear. That’s because budgeting in the context of so many unknowns—from future medical needs to cognitive decline to ultimate life expectancy—is complex. At State Street, we are embracing the spending challenge after hearing directly from participants, and working with leading sponsors and recordkeepers to explore solutions.

Findings from our 2018 Global Retirement Reality Report show that over 75% of participants in the US would value a predictable retirement income solution offered by their employers. Given the diminishing pension model, it’s not surprising that workers today are looking for security tomorrow. However, our survey found that people are looking for more than a stable income stream. When asked how they would like to access their savings in the retirement, US participants favored a hybrid approach:

  • 40% opted for flexible access to part of their savings in the early years of retirement and use of their remaining savings as stable income in the later years
  • 26% opted for flexible access to retirement savings, even if that meant the savings might run out in the retirees’ lifetime 
  • 22% opted for a stable retirement income that lasts a lifetime, even if that means sacrificing on the flexibility to change the amount received from month to month

Informed by these insights and ongoing research, we are innovating solutions that balance retirees’ need for future security with their desire to enjoy hard-earned savings in early retirement. In collaboration with our clients and industry partners, we are currently creating approaches that span the spending spectrum, from focused drawdown solutions to a comprehensive IncomeWise strategy. This year, begin to consider your organization’s outlook on the right-sized solution. To learn more about how one mega-plan is solving for retirement income, see our profile on the University of California.

Looking Ahead

With open enrollment upon us, it’s the right time for participants to take a fresh look at their financial lives and ensure that they’re getting the most out of their workplace retirement benefits. With guidance and nudges from plan sponsors, even small changes today can make a difference for the future.


State Street Global Advisors Global Entities

The views expressed in this material are the views of SSGA Defined Contribution as at 13 Sept 2019, and are subject to change based on market and other conditions. This document contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of anyfuture performance, and actual results or developments may differ materially from those projected. The information provided does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status or investment horizon.

Unless otherwise noted, the opinions of the authors provided are not necessarily those of State Street. Views and opinions are subject to change at any time based on market and other conditions. You should consult your tax and financial advisor. All material has been obtained from sources believed to be reliable. There is no representation or warranty as to the accuracy of the information, and State Street shall have no liability for decisions based on such information.

None of State Street Global Advisors or its affiliates (“SSGA”) are acting in a fiduciary capacity in connection with the provision of the information contained herein. SSGA’s role as a fiduciary with respect to the products and services described herein commences once SSGA has been retained to act in a fiduciary capacity pursuant to a written agreement and receipt of a fee. Prior to such time, SSGA is not undertaking to provide impartial investment advice or to give advice in a fiduciary capacity in connection with the sale or distribution of the products or services described herein. SSGA has a financial interest in the sale of our investment products and services.

Investing involves risk, including the risk of loss of principal. Diversification does not ensure a profit or guarantee against loss.

The whole or any part of this work may not be reproduced, copied or transmitted or any of its contents disclosed to third parties without SSGA’s express written consent.

The information contained in this communication is not a research recommendation or ‘investment research’ and is classified as a ‘Marketing Communication’ in accordance with the Markets in Financial Instruments Directive (2014/65/EU) or applicable Swiss regulation. This means that this marketing communication (a) has not been prepared in accordance with legal requirements designed to promote the independence of investment research (b) is not subject to any prohibition on dealing ahead of the dissemination of investment research.

© 2019 State Street Corporation. All Rights Reserved.


EXP: September 30, 2020