Look at the Frame

Alison Cooke Mintzer (photo by Chris Ramirez)

Throughout the last year, I’ve been thinking a lot about the framing of information. Some of that has come from trying to manage my children of various ages and connecting with them about the news, school, homework and, well, life. It never ceases to amaze me how my delivering the same information, slightly differently, can produce such varied understanding and results. If I’m not careful, there could end up being many versions of “the truth.”

We’ve all seen a good amount of that over the past year, as the pandemic has been experienced so differently across America. I’ve been lucky: My job, as well as my husband’s, can be done remotely. Our children have remained healthy.

Further, we’ve kept our retirement savings going and stuck to our financial plans; I know that many are in this position. If you’ve been in your at-home bubble and working with clients who have been the same, it might be difficult to remember how many Americans have experienced the opposite.

“Although some Americans have recovered from pandemic-related financial hardships or gone through the pandemic without any, many others are still trying to find new work or remain at a reduced income level,” a recent survey report from Commonwealth says.

The survey reiterated findings that the economic hardship from the pandemic has disproportionately fallen on women, people of color, and low- and moderate-income (LMI) adults. Why was the quote of interest to me? The report authors said these stories “may be buried by national averages about increased savings and decreased unemployment rates.”

They’re right—there have been many articles recently touting the “record contributions to” or “record balances of” retirement plans. Yet, when one digs in, it’s clear we need to be cautious about the framing of the data. For every story that notes, “one-third of 401(k) savers increased their savings rate,” let’s remember that means two-thirds did not. A great example of this was the headline of Fidelity’s third-quarter analysis: “Steady Contributions and Market Performance Lead to Increased Balances; Ongoing Financial Uncertainty Also Drove Withdrawals.”

Let’s be frank, average balances reaching record levels generally means the markets are going up—have you checked your retirement account lately? If you remained invested, you’ve likely seen a healthy increase; the S&P 500 1-Year return, as of April, was 43.56%!

As we evaluated the PLANSPONSOR Plan Sponsor of the Year entries this year, we were struck by the dichotomies among plans of the same size. Some employers enriched matches or made excess contributions to participants because the company was doing well; others found ways to help contribute to their furloughed or newly part-time employees while trying to stay afloat.

For all the folks with a climbing defined contribution (DC) plan account balance, many are without. Some participants in your clients’ plans might have spouses or partners in that latter position. For all the good news we’re seeing, it’s imperative we remember that, along with this climbing market that so many of us have benefited from, there have been growing lines at food banks, rent and mortgage payments missed, and, of course, withdrawals from plans after the Coronavirus Aid, Relief and Economic Security (CARES) Act was enacted. For all to be able to move forward, financial wellness and financial literacy cannot just be buzzwords; for many, they’ve become a vital element in our employer-sponsored plan world.