Workers Need Help Understanding Their Retirement Plans

A survey found that employees are confused about benefits including group retirement plans, but retirement is their most important financial goal and they would like help from a professional to achieve it.
Among workplace benefits, employees find group retirement plans such as 401(k) and 403(b) the most difficult to understand, according to the Four Seasons Financial Education 2016 Employee Financial Wellness Survey. Thirty-nine percent of workers said their retirement plan is the hardest to comprehend, while 35% said they fully understand all their employer benefits. The second most difficult benefit to understand is the group health insurance plan, cited by 26% of employees. Health savings account and flexible spending accounts tied for third most difficult (20%), and life insurance was reported to be the least complicated benefit to understand (13%).

When asked how well they understand their employers’ 401(k) plan investment options, 14% of employees who have no financial wellness programs at work said “extremely well.” That number increased to 22% for employees who have a wellness program.

“This data tells us even more work and innovation are needed to help employees understand their employer retirement plans,” says Travis Freeman, president of FSFE. “It likely requires a team effort between the employer, plan adviser and financial wellness program.”

Despite retirement plans being the most difficult benefit to understand, overall workers said retirement is their most important financial goal (35%), followed by budgeting and managing debt (33%) and financial planning (22%). Tax planning was the least important goal (1%). When broken down into age groups, however, the survey found that only 7.6% of employees ages 18 to 29 consider retirement their top financial goal. This group is most focused on budgeting and paying down debt. Women were also more likely than men to name budgeting and debt as their primary financial goal (36.5% compared with 28.2%, respectively).

Employees said access to one-on-one guidance with a professional would be most helpful in achieving their retirement goals (48%), followed by more retirement education (38%), a customized retirement plan (37%), and calculators and tools (23%). The survey also found that many workers would be open to the possibility of sharing the cost of a workplace financial wellness program that could help them achieve their goals (49%). Thirty-three percent said it’s unlikely, and 18% said it’s likely.

The survey results are available here.