June 13, 2017

CFPB: Helping People Plan of Retirement

With help, consumers can better visualize outcomes, plan their decision-making, and make the best decisions about their retirement finances.

In a recent study, we tested ways to help people better visualize the results of their retirement choices and plan ahead for significant decisions.

When people approach retirement age, they have to make many difficult, often irreversible choices. Just to give a few examples of these decisions, people must decide:

These decisions are complicated for many reasons. Among them:

Before and after: Two moments where you can provide help

Developing ways to help consumers understand their retirement planning and management options can help consumers overcome some of these challenges. Here are two ways the study suggests helping workers plan for retirement.

Helping with decisions in advance of retirement

Simplify consumer communications and use effective visuals.

In the study, we tested whether email messages featuring relevant photographs and illustrations sent to consumers ages 55 and younger helped them to understand their choices and take action. Among other findings, the study suggested that consumers responded better to communications with visuals than to those without visuals.

Helping with decisions at the time of retirement

Offer simplified retirement planning resources for soon-to-be retirees.

In the study, we tested a streamlined form explaining various options for withdrawing money from retirement accounts. The study found that, compared to the standard form provided by their retirement plan providers, participants preferred the streamlined form and described it as being clearer about their options for withdrawing their money.

Applying the research today

In brief, the research found that people were interested in straightforward, trustworthy ways to simplify their retirement planning and personal retirement account management. The findings can be used by employers, retirement plan administrators, financial educators, and more. All of these parties play a role in helping people choose among retirement services and products. At the CFPB, we encourage further research in this area.

And, if you’re thinking about your own retirement, you can use this research yourself. Well before the time of retirement, consider the choices you’ll face when you leave your job and when you’ll begin spending your retirement savings.

For more on the research, along with examples of the strategies and communications that we tested in the study, read the report, Consumer Insights on Managing Funds at Retirement.

This post was originally published here.