Running the numbers on retirement readiness

Using data-driven insights to make the case for better participant outcomes

Over the last decade, the retirement industry has witnessed the significant impact of strategic plan design on participant outcomes. A growing body of research shows the benefits of features like auto-escalation, auto-enrollment and more, but how do plan sponsors decide which levers to pull and how hard to pull them? To answer that question, BlackRock built Future in Focus®, a tool that quantifies the trade-offs between different plan design variables and can help you deliver optimal results for participants.

Below are three of the most common ways your peers have been using Future in Focus to support plan design decisions. Try these for yourself—or use the recently enhanced tool to explore the impact of other potential changes.

Stretching the match

The employer match is one of a plan sponsor’s most powerful resources to encourage positive savings behaviors. But how do you best use it to reward saving while also managing cost? Stretching the match is one answer. Say you're currently matching 100% of contributions up to a rate of 3%. Shifting to a 50% match up to a rate of 6% is likely to boost your employees’ savings rates at no additional employer cost.

Take a closer look at how stretching the match can improve participant outcomes in this video, or experiment with various match scenarios using Future in Focus.

Expanding the autos

Sometimes the biggest hurdle to helping employees save is getting them to sign up for the plan in the first place—or, once they're signed up, encouraging them to increase their contributions. That's where automatic features come in. Auto-enrollment gets employees saving from the moment they become eligible for a plan, putting their money to work right away without requiring them to jump through any hoops. Auto-escalation further nudges participants, helping them go from saving to saving enough.

The benefits of autos can be remarkable—and they can be quantified. This video below calculates the long-term effect of starting contributions 10 years earlier, and automatically increasing participant’s contributions by 1% each year up to 10%. Future in Focus lets you shift the variables and compare different outcomes.

The impact of fees

It seems obvious to say that, all else being equal, lower fees are better than higher fees. But how would a change from, say, a 0.60% fee to a 0.40% fee affect participants’ outcomes? It turns out that reducing fees by 20 basis points could translate into tens of thousands of dollars over the decades—money that could make the difference between retirement-ready and retirement not-quite-ready.

This video illustrates the impact of reducing fees and provides real-life insights that could add clarity during an investment review. Help your clients understand the impact of fees today with Future in Focus.

With just a few straightforward inputs, you can understand how a plan’s specific default savings and investment features currently prepare participants for retirement. You can also explore custom "what if" scenarios to identify changes that could have the biggest influence on participant outcomes—giving you valuable perspective for plan design conversations.

Let’s start building your scenario

Get in touch with your defined contribution consultant who can offer a data-driven analysis to support plan design conversations.
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