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Choice is the Driving Factor in 403(b) Participation


“Teachers are expected to reach unattainable goals with inadequate tools. The miracle is that at times they accomplish this impossible task.” – Haim Ginott

Many of us read this quote and fondly recall a teacher who made a significant impact in our formative years. Teachers face many challenges in the classroom, carefully balancing the demands placed on them. Retirement planning advisors have an opportunity to serve them with wise guidance, helping them navigate the challenges of securing a quality retirement with ease and confidence.

According to a 2018 study by the National Tax-Deferred Savings Association (NTSA), many teachers have experienced a reduction in retirement benefits and many lack access to Social Security. NTSA found that in the 4,400 school districts across the country, shifting to a single provider directly correlates to decreased 403(b) participation. As shrinking pension benefits cause the retirement funding gap to increase, supplementing retirement with savings is essential.

Offering more retirement plans may carry an administrative burden, but the benefits clearly outweigh the effort. NTSA found that contribution rates among plans with 15 or more providers increased by an average of 203%.  In contrast, districts with only one provider had the lowest participation rates, at 8%—well below the national average.

Given the personal nature of retirement planning, having more choices yields opportunities to engage a broader range of participants. Education is essential to navigating those choices (a truth across all industries). “Seven out of ten workers who have zero retirement savings do not have access to any retirement education from their employers,” the study states. “Employers that do not provide access to retirement education have employees who report higher levels of anxiety and fear about retirement.” As advisors, you play a significant role that results in more business and higher contribution rates.

Also Read: How to Increase Your AUM with Your Current Participants

Teachers are eager for help navigating their retirement plans, and “participants who use an advisor have nearly double the median account balance [of] those who do not.” Additionally, those with advisors are more likely to increase contributions significantly (on average 24% more often) and express an overall higher satisfaction with confidence in their retirement goals. (Some may complain that advisors are expensive, but the data shows that not having an advisor is more problematic.)

We appreciate those who serve our nation’s children and young adults in the classroom, and we thank those of you who help those educators secure a successful retirement. Click here to find out how The Retirement Analysis Kit (TRAK) can boost your participants’ engagement.
This entry was posted in Retirement Planning Software, 403(b)/457, Retirement Readiness by Edward Dressel

With a long history of working with corporate accounts of all sizes RetireReady Solutions will draw on our experience to help your advisors increase their sales through client education.

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