As part of the Ontario Securities Commission (OSC)’s strategy and initiative to respond to the needs and priorities of the silver population, it released a report detailing how organizations can encourage retirement planning.
Conducted in collaboration with the Behavioural Insights Team (BIT), OSC looked at the primary challenges people experience moving between the idea of retirement plan to actually creating one. OSC director of the investor office Tyler Fleming said the study examined simple and low-cost interventions to make retirement planning easier.
“When it comes to preparing for retirement, even seemingly small roadblocks can have a paralyzing effect,” Fleming said. “Our study identifies evidence-based approaches that organizations can use to address these barriers and encourage retirement planning.”
Some common barriers identified in the report include the perceived length and complexity of retirement planning, a tendency to ignore the future, optimism about savings, and a risk of discounting long-term needs.
The study also pointed out several interventions to counter these barriers including breaking retirement planning into a series of small steps, nudging people at moments when they are likely to be thinking about the future (such as birthdays), highlighting short-term psychological benefits of having a plan in place (such as the opportunity to build financial confidence and security) and prompting individuals to think about the friends and family they will be able to spend more time with in retirement.
Here are some other barriers presented in the study, and opportunities organizations can use to help people overcome them:
Barrier: People tend to go with the default option, and the default is not to plan for retirement.
Opportunity: Make planning for retirement the default option. Eliminate or mitigate the impact of the default option by requiring people to actively choose to make a retirement plan or not to.
Barrier: People will avoid making a retirement plan because of the perceived length and complexity of the process.
Opportunity: Frame retirement planning in ways that reduce the perceived challenges, making it feel more concrete and attainable.
Barrier: The idea of retirement planning can bring on strong negative emotions and people may put it off to avoid those emotions.
Opportunity: Ask people to complete a retirement plan at times when they are less likely to have strong negative emotions about their retirement finances.
You can read the full study here.