Q: We know that emotion plays a role in money, and therefore retirement. What are some ways we can help employees offset less-than-rational emotion and thus make better decisions about their retirements?

Erick Arndt Valley 200 Advisor

A: Behavioral economics have been the subject of much discussion in recent years, as you know. Money is a deeply personal subject for most people, and we often view it as a big factor in our security. That’s why it is difficult to get people to take a rational, rather than emotional, look at their own financial behaviors. There are a few areas where employers and plan providers can help employees make decisions that are more rational, though. PIMCO recently published an article1 with four suggestions you may be able to use.

  • First, make sure employees receive education about the consequences of taking Social Security benefits at the earliest possible age, and the benefits of beginning payments at (or after) full retirement age.
  • Second, consider including education about annuities in your pre-retirement sessions. These can help overcome fears about running out of money. Such fear may lead people to underspend in the early years of their retirement; PIMCO claims that 18 years into retirement many people have spent only 20% of their nest egg. For retirees who remain uncomfortable with annuities, PIMCO recommends education about how a conservative asset allocation may be used to provide some relative stability and hedge against longevity risk. Read the article for more useful information.


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1    PIMCO Behavioral Insights, Rationality and Retirement: Mutually Exclusive?, Richard Fulford, Steve Sapra, April 2019

For plan sponsor use only, not for use with participants or the general public. This information is not intended as authoritative guidance or tax or legal advice. You should consult with your attorney or tax advisor for guidance on your specific situation.

Kmotion, Inc., 412 Beavercreek Road, Suite 611, Oregon City, OR 97045; www.kmotion.com

© 2019 Kmotion, Inc. This newsletter is a publication of Kmotion, Inc., whose role is solely that of publisher. The articles and opinions in this publication are for general information only and are not intended to provide tax or legal advice or recommendations for any particular situation or type of retirement plan. Nothing in this publication should be construed as legal or tax guidance; nor as the sole authority on any regulation, law or ruling as it applies to a specific plan or situation. Plan sponsors should consult the plan’s legal counsel or tax advisor for advice regarding plan-specific issues.

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