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Presented By:
Tom FosterNational SpokespersonMassMutual Workplace Solutions
Retirement Readiness& The Bottom Line
For Financial Professional use only. Not for use with Plan Sponsors or Plan Participants
Why we do what we do at MassMutual?Help people secure their financial future and protect those who matter most
For Financial Professional use only. Not for use with Plan Sponsors or Plan Participants
http://www.plansponsor.com/Downturn_Remakes_Americans_Retirement_Expectations.aspxhttp://www.fidelity.com/inside-fidelity/employer-services/fidelity-investments-study-finds-shift-in-generation-y-attitudeshttp://www.lifeinsuranceselling.com/Issues/2010/October-2010/Pages/MDRT-study-sheds-light-on-connecting-with-Generation-X.aspx?page=1http://www.plansponsor.com/Younger_Boomers_Worry_More_about_Retirement_than_Older_Boomers.aspxhttp://www.metlife.com/assets/cao/mmi/publications/studies/2010/mmi-early-boomers.pdfThe MetLife Report on The Oldest Boomers, May 2013
32MILLIONLATE BOOMERS MAY NEVER BE ABLE TO RETIRE,
OVER
For Financial Professional use only. Not for use with Plan Sponsors or Plan Participants
A generation lost
72MILLIONWORKERS WILL BE AT RETIREMENTAGE BY 2020
A generation lost
For Financial Professional use only. Not for use with Plan Sponsors or Plan Participants
http://www.plansponsor.com/Downturn_Remakes_Americans_Retirement_Expectations.aspxhttp://www.fidelity.com/inside-fidelity/employer-services/fidelity-investments-study-finds-shift-in-generation-y-attitudeshttp://www.lifeinsuranceselling.com/Issues/2010/October-2010/Pages/MDRT-study-sheds-light-on-connecting-with-Generation-X.aspx?page=1http://www.plansponsor.com/Younger_Boomers_Worry_More_about_Retirement_than_Older_Boomers.aspxhttp://www.metlife.com/assets/cao/mmi/publications/studies/2010/mmi-early-boomers.pdfThe MetLife Report on The Oldest Boomers, May 2013
YOUNGERBOOMERSARE MORE ANXIOUS
A generation lost
For Financial Professional use only. Not for use with Plan Sponsors or Plan Participants
http://www.plansponsor.com/Downturn_Remakes_Americans_Retirement_Expectations.aspxhttp://www.fidelity.com/inside-fidelity/employer-services/fidelity-investments-study-finds-shift-in-generation-y-attitudeshttp://www.lifeinsuranceselling.com/Issues/2010/October-2010/Pages/MDRT-study-sheds-light-on-connecting-with-Generation-X.aspx?page=1http://www.plansponsor.com/Younger_Boomers_Worry_More_about_Retirement_than_Older_Boomers.aspxhttp://www.metlife.com/assets/cao/mmi/publications/studies/2010/mmi-early-boomers.pdfThe MetLife Report on The Oldest Boomers, May 2013
A generation lost WORKINGLONGER &WORKING INRETIREMENT
LIKELY
For Financial Professional use only. Not for use with Plan Sponsors or Plan Participants
http://www.plansponsor.com/Downturn_Remakes_Americans_Retirement_Expectations.aspxhttp://www.fidelity.com/inside-fidelity/employer-services/fidelity-investments-study-finds-shift-in-generation-y-attitudeshttp://www.lifeinsuranceselling.com/Issues/2010/October-2010/Pages/MDRT-study-sheds-light-on-connecting-with-Generation-X.aspx?page=1http://www.plansponsor.com/Younger_Boomers_Worry_More_about_Retirement_than_Older_Boomers.aspxhttp://www.metlife.com/assets/cao/mmi/publications/studies/2010/mmi-early-boomers.pdfThe MetLife Report on The Oldest Boomers, May 2013
76PERCENTOF WORKERS EXPECT
TO DELAYRETIREMENTWITH 24% UNSURE
A generation lost
For Financial Professional use only. Not for use with Plan Sponsors or Plan Participants
http://www.plansponsor.com/Downturn_Remakes_Americans_Retirement_Expectations.aspxhttp://www.fidelity.com/inside-fidelity/employer-services/fidelity-investments-study-finds-shift-in-generation-y-attitudeshttp://www.lifeinsuranceselling.com/Issues/2010/October-2010/Pages/MDRT-study-sheds-light-on-connecting-with-Generation-X.aspx?page=1http://www.plansponsor.com/Younger_Boomers_Worry_More_about_Retirement_than_Older_Boomers.aspxhttp://www.metlife.com/assets/cao/mmi/publications/studies/2010/mmi-early-boomers.pdfThe MetLife Report on The Oldest Boomers, May 2013
A generation lost UNDER-& UNDERSERVED
LEADS TOUNPREDICTABLEOUTCOMES
PREPARED
For Financial Professional use only. Not for use with Plan Sponsors or Plan Participants
http://www.plansponsor.com/Downturn_Remakes_Americans_Retirement_Expectations.aspxhttp://www.fidelity.com/inside-fidelity/employer-services/fidelity-investments-study-finds-shift-in-generation-y-attitudeshttp://www.lifeinsuranceselling.com/Issues/2010/October-2010/Pages/MDRT-study-sheds-light-on-connecting-with-Generation-X.aspx?page=1http://www.plansponsor.com/Younger_Boomers_Worry_More_about_Retirement_than_Older_Boomers.aspxhttp://www.metlife.com/assets/cao/mmi/publications/studies/2010/mmi-early-boomers.pdfThe MetLife Report on The Oldest Boomers, May 2013
The retirement industry An example of alignment between individual and employer goals.
For Financial Professional use only. Not for use with Plan Sponsors or Plan Participants
Let me retire, on my own termsWe need to survive and thrive in an ever-changing
competitive environment
For Financial Professional use only. Not for use with Plan Sponsors or Plan Participants
Benefit programs are evolving
Healthcare & protection
Retirement
Employer sponsored plans & gov’t
managed care
Cash balance + DC + Social Security
Employers provide healthcare benefits
during WWII
DB + DC + Social Security
SUBSIDIZEREMPLOYER
High deductible healthcare plan, protection &
employee wellness
Defined contribution plan + Social Security
ENABLER
Converging marketplace
Holistic benefit solutions
INFLUENCER
Can Plan Sponsors afford to invest in Defined Contribution plans?
The reality is...They can’t afford not to
For Financial Professional use only. Not for use with Plan Sponsors or Plan Participants
When employees work longer than desired, costs become harder to predict
Unpredictable workforce costs
For Financial Professional use only. Not for use with Plan Sponsors or Plan Participants
Lower productivity
Higher healthcare and salary costs
Unexpected turnover and financial stress
Drive volatility and instability
Insurance costs and salary differential add up
For Financial Professional use only. Not for use with Plan Sponsors or Plan Participants
Source: CIGNA (healthcare premium)Source: www.lanl.gov (Voluntary LTD rates); Ge Re Research, www.genre.com/aboutus/press-releases/gen-re-announces-2013-us-group-disability-and-group-term-life-market-survey-results.html
Source: Bureau of Labor Statistics, www.bls.gov/news.release/archives/wkyeng_10202015.pdf (Salary Differential)
$11,300
$50,700
Annual employerhealthcare & disabilitypremiums $3,100
20-30 60+
Averageannual salarydifferential
$38,400
20-30 60+
Costs employer $20,000+ per employee per year
Source: CIGNA (healthcare premium)Source: www.lanl.gov (Voluntary LTD rates); Ge Re Research, www.genre.com/aboutus/press-releases/gen-re-announces-2013-us-group-disability-and-group-term-life-market-survey-results.html
Source: Bureau of Labor Statistics, www.bls.gov/news.release/archives/wkyeng_10202015.pdf (Salary Differential)
Company 1 Company 2 Company 3
Percent ofWorkforce 60+
Percent ofWorkforce 40-60
Percent ofWorkforceUnder 40
Annual healthcare &Disability premiums
30% 20% 10%
Annual salary costs
45% 40% 35%
25% 40% 55%
For Financial Professional use only. Not for use with Plan Sponsors or Plan Participants
Three like companies with 1,000 employees that only vary in worker demographics
Case Study
$7.6M $6.6M $5.5M$49.5M $48.0M $46.5M
http://www.forbes.com/sites/financialfinesse/2013/06/13/are-you-financially-stressed/”https://www.kansascityfed.org/publicat/cap/carwp09-01.pdf
Financially stressed workers
For Financial Professional use only. Not for use with Plan Sponsors or Plan Participants
Reducing stress with just 10% of employees
reduces costs by ~ $500,000 per yearper employee, on average
Cost employers $5,000 per year
Costs an employer roughly 150%of salary for replacement and productivity loss
1% improvement in employee retention saves an estimated ~ $700,000 per year
http:///ww2.cfo.com/big-data-technology/2015/10/big-data-can-help-cut-employee-turnover-costs
Unexpected turnover
For Financial Professional use only. Not for use with Plan Sponsors or Plan Participants
EMPLOYER
ADVISOR / INTERMEDIARY
EMPLOYEES
A “Predictable Workforce” drives good outcomes for all parties in the equation
http://ww2.cfo.com/retirement-plans/2015/05/employers-plan-bump-401k-contributions/
The solution
For Financial Professional use only. Not for use with Plan Sponsors or Plan Participants
Driving outcomesat two levels
Plan design
Employee action
For Financial Professional use only. Not for use with Plan Sponsors or Plan Participants
Design easy choices to address inertia
Manage losses to address loss
aversion
Provide behavioral time machines to address myopia
SAVE(ENROLL)
SAVE MORE(ADEQUATE
SAVINGS RATE)
Auto enrollment
Optimize employer match
The face tool
Pre-plan savings increases
Get raise and save
Visualize retirement
Target date funds
Lifetime statements
Projected retirement income
Save (enroll)
Save more (adequate
savings rate)
Save smarter (wise investment
decisions)
For Financial Professional use only. Not for use with Plan Sponsors or Plan Participants
Practical prescriptions to build better outcomes
Nationwide Small Business Owners Survey, October 2014J.P. Morgan Asset Management “Navigating the every-changing health care landscape”-August 2015
84% of small business owners are anticipating changes to benefits in next two years
Help free up $$$ and re-position investment towards other benefits like retirement and protection gaps
The advisor’s role
For Financial Professional use only. Not for use with Plan Sponsors or Plan Participants
Help employees retire in a respectable fashion
Help companies and employees view retirement savings in the context of the broader benefits package
Help companies understand the implications of health care costs on employees’ ability to save in 401(k) plans
Help people retire earlier & deliver long-term net benefits
Do nothing Invest-plandesign
Invest &reduce
Invest w/upside
Costs Invest $ Net benefits
MassMutual Analysis- 2015
Invest in plan design changes
Invest in participant engagementactivities
For Financial Professional use only. Not for use with Plan Sponsors or Plan Participants
As health savings accounts and other benefits become more prevalent, there will be competition for savings in the 401(k)
Competition for savings
For Financial Professional use only. Not for use with Plan Sponsors or Plan Participants
Do I save for healthcare
cost today?
Do I save for retirementfor tomorrow?
23
Driving the need for guided interactions and holistic benefit solutions
Healthsavings
High deductiblehealthcare
Defined contribution
plan
For Financial Professional use only. Not for use with Plan Sponsors or Plan Participants
Employee wellness program
Defined benefit or cash balance plan
Benefits will continue to bundle andcomingle…
*2015 MassMutual Employee Benefits Security Study
The opportunities are clear
38%SAY THEY KNOW
LITTLE OR NOTHINGABOUT THEIR EMPLOYER-PROVIDED
BENEFITS
For Financial Professional use only. Not for use with Plan Sponsors or Plan Participants
37%FIND MANAGING THEIR
PERSONALFINANCESSOMEWHAT ORVERY DIFFICULT
42%TWO IN FIVE ARE
CLUELESSWHETHER OR NOT THEY ARE ON TRACK
TO RETIRECOMFORTABLY
40%PERSONAL FINANCES
ARE ADISTRACTIONAT WORKMAKING THEM LESS
PRODUCTIVE
Make sure to have the right plan that:
What’s the bottom line for employers?
For Financial Professional use only. Not for use with Plan Sponsors or Plan Participants
Meets your current goals and objectives
Conforms to all of the fiduciary guidelines
Has the ideal plan design to optimize long-term returns and outcomes
Delivers an active participant engagement model
Incorporates guidance tools and holistic solutions to help people retire on their terms
Make sure you have the right interactive tools to engage and measures to act:
Assess current state of employee retirement readiness and paycheck
Understand cost to the business when employees lack retirement readiness and financial security
Assess potential cost re-deployment from benefits right-sizing
Provide tools to measure how well an employee is progressing in replacing 75+ of their income at age 67
Monitor progress & make adjustments to keep employees on track
For Financial Professional use only. Not for use with Plan Sponsors or Plan Participants
What’s the bottom line for employers?
Employees - tools & guidance:
Focused Personalized Simple and easy-to-understand
Encourage action
What’s the bottom line for employees?
For Financial Professional use only. Not for use with Plan Sponsors or Plan Participants
What’s the bottom line for advisors?
For Financial Professional use only. Not for use with Plan Sponsors or Plan Participants
Advisors – support & vision: Converging markets require a holistic view
Help companies and employees view retirement savings in the context of the broader benefits package
Identify opportunities to re-deploy benefit costs into improving retirement readiness and financial security
Leverage MassMutual’s interactive tools and thought-leadership
Why should the employer care?
How does an employee maximize limited benefit dollars?
How do you administer themodern cafeteria plan?
For Financial Professional use only. Not for use with Plan Sponsors or Plan Participants
The future@work
© 2016 Massachusetts Mutual Life Insurance Company, Springfield, MA 01111-0001. All rights reserved. www.massmutual.com. MassMutual Financial Group is a marketing name for Massachusetts Mutual Life Insurance Company (MassMutual) [of which RetirementServices is a division] and its affiliated companies and sales representatives. RS-38335-02
For Financial Professional use only. Not for use with Plan Sponsors or Plan Participants