Roadmap Defines Key Employer Tactics to Help Working Americans
Achieve 30-plus Years of RetirementDesign for Income recommends that employers design 401(k) plans
with a targeted income replacement goal. A reasonable starting point
could be to target 50 percent of final net pay. But an employer may
set a different income target depending on a number of factors,
including other benefits offered and overall plan demographics.3Account for Health Care encourages both employers and employees
to recognize the role health care expenses are likely to play in
retirement. Health care strategies -- such as High Deductible Health
Plans (HDHP) and Health Savings Accounts (HSA) -- can help boost
employee savings opportunities. More than half (57 percent) of
pre-retirees4 and recent retirees5 think they
will need less than$50,000 to pay for health care expenses in
retirement.6 However, Fidelity’s 2014 Retiree Health Care
Cost Estimate shows that the average 65-year-old couple may need more
than $220,0007 to pay for health care expenses in
retirement – a significant gap between employee perception and reality.
Engage and Empower promotes the importance of setting employees
on the appropriate path to retirement. The right combination of
guidance and easy access to resources can significantly drive
engagement and affect behavior. Employees who used Fidelity web-based
tools raised their average deferral by 4.3 percentage points.8
For those who won’t engage, aggressive automatic defaults -- including
enrollment, increasing savings rates and investing in age-appropriate
investment vehicles -- can put employees on the correct path even when
they don’t engage.
Transition with Confidence is the ultimate goal of Retirement
Vision 2020, andprovides employees with help as they think
about the next phase of their lives, whether it is traditional
retirement or an encore career. Nearly one in three (31 percent)
Americans say they are not sure if they can meet their retirement
income requirements, while more than one in 10 (11 percent) flat out
say they can’t.9 By empowering employees with access to
information and insight, employers can help them determine whether
they are ready to retire with confidence.
Employers often develop a strategic plan based on what they think their
companies will look like in five years. Fidelity Investments is asking
employers also to consider what their employees’ retirement outlook will
look like down the road. “Retirement
Vision 2020: Fidelity’s Prescription to Help Drive Better Outcomes”
is a holistic retirement readiness roadmap for employers, advisors and
consultants to ensure that as many American workers as possible, across
all generations, are prepared for retirement. It includes strategies
that look at plan design, health care costs, employee engagement
(including aggressive defaults) and personalized help as employees
transition into retirement.
Fidelity released Retirement Vision 2020 in mid-June 2014 in noting that
millions of employees are now responsible for managing their own
retirement savings and investments. An overwhelming 91 percent of
Americans say they know it is their responsibility to obtain the
information they need to make sound retirement saving decisions,
compared to only 4 percent who say that it is their employers’
responsibility and another 4 percent who would lean on the government
for this information.1
The company drew on its expertise and insight as the nation’s largest
retirement and benefits provider2 to map out four critical
strategies to help employees save and invest more effectively -- ranging
from accounting for health care costs to incorporating digital and
mobile technologies that increase employees’ knowledge and engagement in
“Twenty years ago, many Americans were still depending on their
company’s traditional pension and retiree medical plans to finance their
retirement needs,” said Doug Fisher, senior vice president of Thought
Leadership and Policy Development for Workplace Investing at Fidelity
Investments. “Today’s employees are being asked to assume more personal
responsibility for their health and retirement savings – which can be
empowering, challenging and even intimidating all at the same time.”
The four-pronged approach includes Fidelity’s “prescription” to drive
outcomes by helping employees better prepare for retirement:
“Benefit designs, financial education and innovative delivery methods
using mobile and social must evolve to address the realities of today’s
participants and their workplaces,” said Fisher. “Fidelity’s Retirement
Vision 2020 provides actionable insights and solutions to help employees
of all generations generate savings that can last throughout retirement.”
The full version of Fidelity’s Retirement Vision 2020, and an
paper and infographic,
can be found here.
About Fidelity Investments
At Fidelity, our goal is to make financial expertise broadly accessible
and effective in helping people live the lives they want. We do this by
focusing on a diverse set of customers: from 23 million people investing
their own life savings, to 20,000 businesses needing help managing their
employee benefit programs to 10,000 advisors and brokers needing
technology solutions to invest their own clients’ money. Privately held
and with 40,000 employees around the world, Fidelity is a leading
provider of investment management, retirement planning, portfolio
guidance, brokerage, benefits outsourcing and many other financial
As of May 31, 2014, the company held assets under administration of $4.8
trillion, including managed assets of $2.0 trillion. It is one of the
largest mutual fund companies in the United States and the No. 1
provider of both workplace savings plans and Individual Retirement
Accounts (IRAs). For more information about Fidelity Investments, visit www.fidelity.com.
Keep in mind that investing involves risk. The value of your investment
will fluctuate over time and you may gain or lose money.
Diversification does not ensure a profit or protect against a loss.
Fidelity Brokerage Services LLC, Member NYSE, SIPC
Salem Street, Smithfield, RI 02917
Fidelity Investments Institutional Services Company, Inc.
Salem St., Smithfield, RI 02917
© 2014 FMR LLC. All rights reserved.
1 Fidelity 2013 Better Outcomes Survey conducted by GfK
Public Affairs and Corporate Communications, November 7 – 13, 2013.
2Pensions & Investments, March 3, 2014, “The
largest DC record keepers” and Cerulli Associates’ The Cerulli
Edge®—Retirement Edition, fourth quarter, 2013 based on an industry
survey of firms reporting total IRA assets administered for Q3 2013.
3 With Social Security and other savings and sources
providing the remaining income.
4 Plan to retire within 5-7 years.
5 Retired in the last 2-3 years.
6The Retiree Health survey was conducted by GfK Public
Affairs & Corporate Communications from February 12–18, 2014. The survey
used GfK’s KnowledgePanel, a nationally representativeonline
panel where members are chosen via a probability-based sampling method
covering 98% of the U.S. population.
7Fidelity Benefits Consulting, 2014. Based on a hypothetical
couple retiring at age 65 years or older, with average (82 male, 85
female) life expectancies. Estimates are calculated for “average”
retirees, but may be more or less depending on actual health status,
area of residence and longevity. The Fidelity Retiree Health Care Costs
Estimate assumes individuals do not have employer-provided retiree
health care coverage, but do qualify for the federal government’s
insurance program, Medicare. The calculation takes into account
cost-sharing provisions (such as deductibles and co-insurance)
associated with Medicare Part A and Part B (inpatient and outpatient
medical insurance). It also considers Medicare Part D (prescription drug
coverage) premiums and out-of-pocket costs, as well as certain services
excluded by Medicare. The estimate does not include other health-related
expenses, such as over-the-counter medications, most dental services and
8 Fidelity analysis of web guidance tool usage, 1/1/13 –
9 Fidelity 2013 Better Outcomes Survey conducted by GfK
Public Affairs and Corporate Communications, November 7 – 13, 2013.
Kirsten Plonner, 201-915-8225
us on Twitter @FidelityNews
Source: Fidelity Investments