If you want to measure whether your employees are on track for a successful retirement outcome, here are the four pillars of retirement readiness you need to consider:
- Portfolio allocation. This is where we measure how employees are invested based on their age group. We perform an analysis to see if they’re properly diversified and taking the right amount of risk.
- Savings rates. This is where we want to measure how much everyone is saving by their age group. The general rule of thumb is that everyone should be saving about 12% to 15% of their income, but that’s assuming that everyone is a perfect saver and starts saving in their mid-20s and plans to retire in their mid-60s. As you know, this is rarely the case, so the numbers will be different based on the individual.
- Years to retirement. Here we focus on how close people are to retirement and whether they have saved enough.
- Income replacement ratio. This is where we calculate each employee’s income replacement ratio to see if they’re on track to maintain their current lifestyle into retirement.
We have great tools and resources to make this easy for employees. By evaluating these four pillars of retirement readiness, you can identify where you need to improve to get your employees closer to a successful retirement.
If you have any questions or comments about these concepts or you’re ready to take action and evaluate your current plan, please call or email us so we can set up a free consultation.
If you have any other questions, feel free to reach out to us as well. We’d be happy to help you.