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You’re here because you want to make 401k education work. I do too.
Employers that offer 401k retirement plans make employees fully responsible for defining their future income goals and funding their accounts to attain them.
But most employees don’t know how. That’s due largely to the 40-year-failure of plan-sponsored-approved 401k education.
Shouldn’t plan sponsors insist that the retirement industry make sure employees have the knowledge to use a 401k successfully?
From the early 1990s, I’ve been critical of 401k ed for failing to provide:
- Realistic, personally meaningful and understood account balance targets,
- Proven adult-learning techniques,
- Success-based objectives, detailed competency descriptions, and learner testing, and
- Education strategy (or policy) statements.
I’ve also urged the industry to get help from highly regarded learning professionals – cognitive scientists, adult-education experts, and other education-oriented academics. See the “Dream Starter Workshop Project” (in the
The Failure of 401k Education
Most employees lack the knowledge to use 401ks successfully. Unless the education is fixed, 401ks will continue providing too little retirement income to too many Americans.
Why are these 401k questions often not answered?
Creating ample retirement income is difficult. It won’t happen automatically.
Measuring What We Say 401k Plans Do
Educators must define the competencies participants need to achieve 401k retirement adequacy…plan sponsors must have an education strategy statement to manage educators.
Without measures, plan sponsors don’t know if they are helping employees achieve personal retirement dreams.
Until education measures matter, for most people … retirement is just not going to work.
Using consumer terms helps employees discover that retirement is the most expensive purchase they will ever make.
Without trust, even the greatest plan designs will fail to attract as many employees as possible.
Automatic 401k features will not accomplish what knowledgeable, motivated individuals can do.
401k participants need to see the options they have in purchasing the retirement lifestyle they want.
Most employees don’t know how much to save or how to invest because they don’t know how much they need.
Send a letter to every employee who is not contributing enough to get the maximum company contribution.
Employees and employers can pay now by funding retirement plans—or someone else pays later.
Employees need to view retirement income as the largest purchase they will ever make.
Most baby boomers may not have enough money during retirement to maintain their current standard of living. Published in 1992.
Retirement Adequacy Matters —PowerPoint download
After 40 years of trying everything else — all with limited success — isn’t it time to question the effectiveness of the content and delivery of today’s retirement education? The sheet from the third slide HERE. Handout of slides HERE.
Why it doesn’t work and how plan sponsors can fix it.
Let’s Fix the Failure of Retirement Ed (1998)—PowerPoint download
Presentation content is as fresh today as it was over two decades ago. Little improvement has been made in 401k ed. Handout of slides HERE.