Commentary: The global need to plan for tomorrow, today

A global retirement crisis is brewing. Statistically, people are living longer than ever before. Since the mid-1900s, life expectancy has been increasing by one year, every five years, on average. That means babies born in 2018 can expect to live to be older than 100. While this indicates great progress for individual and societal health, it also means people are going to have to plan for a retirement that could last 20 years on average — a feat for which many are not ready.

The key to successful retirement planning is simple — save as much as you can and begin as early as possible. Employers offering retirement savings plans are strategically positioned to encourage early saving, but according to statistics from the MetLife Employee Benefit Trends Study in nine global markets, 37% of employees stated they are "somewhat behind" or "very far behind" where they want to be in regards to retirement savings. Employers can address this challenge and simultaneously increase employee engagement around existing employer savings plans and other benefit offerings through simple, easy-to-understand retirement education addressing the misconceptions that prevent employees from saving adequately.

In addition to longer life spans, globally, people are having fewer children, which shifts the dependency ratio (the ratio of people in the workforce to those in retirement) to 4 to 1 by 2050 from 8 to 1 in 2017. These factors have long put social security systems and traditional defined benefit plans under stress. Governments are reducing their investment in social security while employers are moving away from DB plans. Although the majority of retirement planning in developed countries rests on individuals, 48% of employees in both developed and emergent nations still look to their employer to provide some sort of savings vehicle.

A review of four years of global market data from the MetLife EBTS reveals 35% of employees have limited time to do the necessary research to make the right financial decisions for themselves and their families. Today's employees need to visualize the true cost of retirement, which will motivate them to save now. Employers are well-positioned to combat this challenge through improved education methods.

When crafting retirement communications, clarity and personalization is essential. Say what you mean by removing industry and corporate jargon, but also customize the message to the audience. Are you speaking mostly to a younger audience? Are many of your employees taking loans from their retirement plans? Tailor the message so that individuals can connect your call to action to their personal situation.

Simplify complex technical terms and remove legalese. Keep what you have to say short and to the point. Most importantly, use visuals. Infographics, animation, videos and imagery help illustrate complex concepts and simplifies the message so it is easier to absorb.

Test your message and format with diverse pilot groups until you are sure that what is being said is understood by most, if not all, of your audience. Use simple, conversational wording, and if possible, inject humor. With so many priorities competing for your employees' attention, you need a way to break through the monotony of everyday communications so employees will be jolted into taking action on this critical employee benefit.

Or, as they say in Latin, "repetition is the mother of all learning." Saving for retirement is a learned behavior, which requires continuous and frequent education and communication. There are multiple touchpoints in an employees' life that warrant a reminder for saving more. In addition to annual enrollment, consider a retirement communications program that is triggered when an employee receives a raise or a promotion, or when they have a significant life change such as the birth of a child or change in relationship status.

For ambitious employers, find ways to create or build upon financial wellness programs that include retirement savings as part of a holistic approach to building, acquiring and saving wealth. A digital "retirement fair" that provides incentives to complete educational quizzes or a personal retirement checkup can be a great filler activity during the months when employees aren't typically engaged with their benefits.

Fernando Jaime is vice president, life and pensions at MetLife Inc. Global Employee Benefits, New York. This content represents the views of the author. It was submitted and edited under Pensions & Investments guidelines, but is not a product of P&I's editorial team.