Fear of the Future: Baby Boomers and Low Participation

When experts in the retirement industry talk about low plan participation, the conversation is often centered on our country’s youngest workers. The consensus seems to be that many young people just don’t have their financial life sorted out yet, and that those in their 20s or early 30s feel they have plenty of time ahead of them to start worrying about something as far off as retirement.

But what about those more seasoned members of your team who haven’t enrolled in your retirement plan? It’s not entirely uncommon to see Baby Boomers approaching retirement age who just don’t seem interested in retirement savings. You might assume that they’re preparing for retirement on their own, but I’ve found that in many cases, the exact opposite is true—they are actively avoiding the retirement conversation.

If you’ve noticed low participation among your older employees, it could be that, like your younger employees, they just haven’t figured their financial futures out yet. They still have questions: How long will they need to work, and will they continue to be able to work? What should they be saving if they haven’t saved enough? With retirement just around the corner, many are afraid of what they don’t know. It’s exactly that fear–their own perception that they should be further along than they are­­–unfortunately in my experience, that leads some older employees to avoid the issue altogether rather than face the embarrassment of asking for help.

A Financial Stigma

This fear was on full display recently when a member of my team was on-site with a new client’s employees and met with a plan participant, a 60-year-old man with significant anxiety about his retirement readiness. Between his wife’s contract income (with no benefits) and some major prior business losses, this man was living paycheck to paycheck. He’d been with his current employer for over four years, but had yet to enroll in his retirement plan. Nearly in tears, he made it clear that he was simply afraid it was too late for him, and he’d been avoiding enrolling to avoid the conversation.  Furthermore, even though he did want help, he said he didn’t have anybody he felt comfortable talking to about the topic.

Of course, we treated this situation like any other. In my experience, the vast majority of people who are not participating in the retirement plan simply want somebody to explain it to them, and answer their questions. And most people living “paycheck to paycheck” just need a little help with simple budgeting to find dollars to contribute. This situation was no different.

That said, there’s a stigma among older employees that they should know more, and so they feel like they shouldn’t need help at this point understanding their finances. In our own research,* we found that Baby Boomers are about half as likely as Millennials to seek financial advice from coworkers, HR representatives, or even family and friends. This could be because older employees don’t feel they need that advice, but I think that many don’t ask because, like the man in my story, they’re embarrassed and afraid.

It’s Never Too Late

Despite this embarrassment, I believe it’s never too late for anyone to begin taking steps to make their retirement more comfortable. When we meet with older individuals, even those who haven’t saved a dime, it’s typical for us to start by reviewing their current expenses. By considering how much money they can afford to start contributing now, and by thinking about how long they could keep working and how long they could delay receiving Social Security benefits, we can help them come up with an approach uniquely suited to them.

It comes down to this: If you think your employees aren’t participating because they don’t need to or want to, that might not be the case. And if you believe your employees are satisfied with the 401(k) plan you offer them, maybe they are–or maybe they’re too embarrassed to tell you how they really feel about retirement.

With some employees, it may be a matter of making them feel comfortable with the idea that they absolutely can still make a difference for their retirement. For those who are still uncomfortable with the idea of talking to an adviser, make sure your provider offers plenty of informational resources they can review on their own. Do what you can to help employees of any age understand that their provider can be a valuable resource, and encourage them to speak with an adviser to help them get on track for retirement, no matter what their age.

*2016 Fisher Investments 401(k) Solutions 401(k) Wellness in the Workplace Survey.

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