Communicating ‘Retirement Mindset’ Leads to Positive Retirement Outcomes

Plan sponsors may be able to proactively engage with retirement plan participants to help improve their retirement outcomes by communicating “optimal” characteristics, research from Goldman Sachs Asset Management found.

Four behaviors—optimism, future orientation, risk vs. reward orientation and financial literacy—can improve retirement savings outcomes, according to GSAM, and should be encouraged in communication. Employers incorporating behavioral insights into their retirement planning process can support and improve plan design, products and services, the GSAM research found.

“Promoting optimism and future orientation may be important to encourage a savings mentality,” stated Chris Ceder, a senior retirement strategist with Goldman Sachs Asset Management, in a press release. “Educational initiatives, communication campaigns and expanded services that promote our future selves may engage workers in their retirement mindset.”

While each of the four behavioral variables contribute towards retirement savings, high optimism may have the highest positive impact, the research showed.

Optimistic participants are more likely (83%) to state their retirement savings are on track or ahead of schedule, compared with 41% of those with low levels of optimism; those with high future orientation answered similarly, as 73% reported that their retirement savings are on track or ahead of schedule, compared with 50% with low future orientation; and there is a greater likelihood of having a personalized retirement plan among those with high optimism (78% vs 42% with low), according to GSAM.

The proportion of people with a personalized financial plan is particularly high for those with both high optimism and high future orientation (83%) and lowest for people with low optimism and low future orientation (33%). In contrast, among people with low levels of those traits, just 31% reported being ahead of schedule with their savings.

Given the research findings, GSAM recommended that plan sponsors can use greater personalization of actionable retirement saving advice to emphasize such behaviors, according to the GSAM research.

“By understanding behavioral tendencies, a sponsor may be able to more effectively personalize education and advice,” the research stated. “Incorporating motivations and their impact on one’s preferences for products and services can help improve communicating offerings effectively and personalizing the retirement savings experience.”

The research report, “Retirement Mindset Matters: Exploring the Mindset of Retirement Savers,” was produced in collaboration with behavioral finance company Syntoniq Inc. Research findings were based on a July survey conducted by Goldman Sachs Asset Management and Qualtrics Experience Management, with a sample size of 5,261 respondents, including 3,673 working individuals and 1,588 retired individuals.