Category Archives: Retirement planning

Lifelong income solutions for retirees

While employers may want to provide better options to their employees, the fiduciary, financial, and administrative hurdles are steep. Retirees will have to pick from a small list of solutions until new alternatives are developed. This article by Milliman’s Kari Jakobe summarizes some of the existing approaches commonly used by retirees to convert their retirement distributions into a lifetime of retirement income.

Employers honored with Save 10 award for helping their employees save for retirement

Save 10 awardees at the Seattle event with their Milliman consultants and special guests Milliman Chairman Ken Mungan and Francis Creighton of Financial Services Roundtable. Photo by Ryan Hart

Twelve employers based in the Pacific Northwest were recognized with the Save 10 award during the 45th annual Milliman Employee Benefits Conference held in Seattle on April 6. The Save 10 award honors their work helping their employees save for retirement.

The Save 10 initiative is a movement to reinforce a “Save 10” rule of thumb, recognizing employers who help their employees to save at least 10% of their income toward retirement. Why Save 10? According to Francis Creighton, Executive Vice President of Government Affairs of Financial Services Roundtable, which sponsors the initiative, 10% is easy to remember and reflects the old adage of saving at least 10% of your income for retirement. While this may not be the ideal contribution rate for everyone, getting employees to save for retirement, and providing employers the tools to allow their employees to do so, remains fundamental.

The Save 10 initiative emphasizes the effectiveness of auto features in retirement plans, such as auto enrollment and auto escalation. Research shows that auto features encourage employees to save, even though they may not remember to sign up and start saving from their hire date. The rate of success in saving increases even more for employees with auto escalation of contribution rates.

Milliman is proud to work with companies that want to provide the best benefits for their employees. Milliman works closely with employers to help provide best-in-class retirement plans for their employees that reflect the philosophy and unique identity of each organization.

Employers honored at the April 6 event were: Expeditors International of Washington, Inc., ICOM America, Inc., McKinstry Co., M Financial Group, Nelson Irrigation Corporation, Olympia Federal Savings, PACCAR Inc., Swanson Group, Inc., Usibelli Coal Mine, Inc., Valley Medical Center, Washington Permanente Medical Group, and Zimmer Gunsul Frasca Architects, LLP.

More information about the initiative is available at

Painters and Allied Trades District Council 82 chooses Milliman for its defined contribution services

Milliman announced today that we have added the Painters and Allied Trades District Council 82 DC Plan as a defined contribution client. The plan covers collectively bargained members in the states of Minnesota, Wisconsin, and North Dakota with approximately 2,300 participants and $155 million in plan assets.

Milliman is providing recordkeeping, consulting, and communication services for the District Council 82 defined contribution plan.

We are thrilled that the Trustees of the Painters and Allied Trades District Council 82 DC Plan chose to hire Milliman. The Trustees decided to merge two different plans together and it was necessary they had a solid solution in place for their members. The Trustees were confident in our reputation for client service and the solution and approach we discussed resonated with them.

Superannuation could benefit from a shift in perspective

As Australia’s Baby Boomer generation continues to retire, the country’s superannuation system enters a drawdown stage. While super funds have focused on accumulation, new legislation will make it clear that their purpose is to provide retirees with income. Under that premise, Milliman’s Jeff Gebler explains why a new retirement consultant “with a new skill-set focused on the implications of drawdown” is needed.

The following excerpt highlights the necessary skill-set.

The modern retirement consultant will need to add and co-ordinate a broad mix of skills to meet the increasingly complex needs of the superannuation industry, including:


Funds have an increasing need for actuarial skills which can help them model member behaviour, changes in legislation and the impact of the Age Pension, risk management strategies, and post-retirement product design.

Data scientist

The business world is now awash with information thanks to advances in technology and affordability. The data scientist can analyse and turn this ‘big data’ into practical insights in areas such as membership, investments and risk.

Investment management

Funds and asset consultants have tended to focus on long-term returns generated during the accumulation phase. However, changing demographics and legislation suggest funds should increasingly focus on the risks of drawdown such as volatility and potential capital losses. With this comes an expanding list of relevant asset classes, many of which (such as derivatives) are traditionally beyond the expertise or depth of existing asset consultants.

Behavioural finance and communications

Funds need to design their products and services taking into account the behavioural tendencies of older investors. For example, financial literacy scores naturally decline by about one percentage point each year after age 60 while older investors are more prone to ‘loss aversion’ than younger investors.


Older investors are highly engaged with their super, including through digital channels. Automated-advice provider Decimal recently released research showing that older investors were the most active users of its enterprise financial advice service.

It’s Your Move: The dash(board) to retirement

O'Brien-ShaneDonald Rumsfield, the former U.S. Secretary of Defense, once discussed “known unknowns,” referring to things that we are aware we don’t know. The idea can be applied to retirement plan participants as well. It is evident year after year that plan participants still lack a fundamental understanding of certain aspects of retirement planning, such as how to invest, how much to invest, and how to create a plan for retirement. These aspects remain widely misunderstood.

Enter the It’s Your Move dashboard on Milliman’s newly reimagined website. This dashboard aims to make participants aware of the tools at their disposal that can help them plan for retirement. The dashboard falls in line with other initiatives in the industry, all aimed toward improving employees’ preparations for retirement. I’ve previously discussed how the working population in the United States is massively unprepared for retirement and suggested that “gamification” was a possible solution. The SaveUp app was cited as an example of the effectiveness that gamification can have on retirement planning.

Now there is another newsmaker with a similar name—the Secure, Accessible, Valuable, Efficient Universal Pension Accounts (SAVE UPs) Act—grabbing a few headlines. SAVE UPs is a new piece of legislation that was introduced by Representative Joe Crowley (D-New York). The main objective is to provide all American workers with the opportunity to generate tax-advantaged assets. The legislation intends to help smaller employers subsidize the cost of contributing to IRAs in the form of a tax credit for the value of the contributions to 10 employee accounts. This bill, if enacted, could be following down a very controversial path similar to that of, I shudder to say, Since the full name of this new legislation threatens to exceed the character limit of any tweet commenting on it, I figured it would be easier to discuss on this platform since the overall objective appears to be to help provide opportunities for more people to prepare for retirement. The new Milliman Benefits dashboard was created with the same goals in mind and has a significantly lower chance of becoming part of the script for the next season of House of Cards.

The new It’s Your Move dashboard was designed to make participants aware of the various successful behaviors that will optimize their experience. With tools that help participants maximize company matches, diversify their investments, and utilize automatic increase and rebalance features, it could help to set new standards for best practices and increase participation rate in the plans that we manage.

PlanAhead - It's Your Move 2

Participant feedback has shown that a knowledge gap still exists in regards to retirement planning and investment decisions. A survey in March showed that 71% of participants were very likely or somewhat likely to seek advice from their plan providers and 69% were likely to seek advice from an independent advisor or financial services company. The advice they were seeking is on how to invest their money, what to do with their savings when they leave their employers, and what to do with the money when they retire. This shows that a majority of participants would like assistance in their retirement planning. The It’s Your Move dashboard helps to do just that. This readily accessible checklist of retirement behaviors is making participants aware of the tools available to them in an effort to improve their retirement outcomes. It can help employees feel more confident about retirement and offer some encouragement and useful information along the way.

Pokémon Go to the bank

O'Brien-ShaneIn what has already been deemed the most popular mobile video game of all time, Pokémon Go perfectly illustrates the power of mobile devices in today’s world. The game, released on July 6, has been downloaded over 15 million times and is being used an average of 43 minutes per day on Android devices. In fact the game itself added $8.2 billion to Nintendo’s market value in just five days following its release, so to say that it has gone viral would be a severe understatement. The object of the game is simple: “Catch ‘em all.” The game uses an overlay of Google Maps to track your movement and, as you walk around town, different fictional animals appear on your device. You, the player, try to catch them.

You may be asking yourself, “What does this have to do with the price of tea in China?” Or to be more accurate, “What does this have to do with 401(k) recordkeeping?” Short of creating a similar augmented reality app that requires participants to check their 401(k) balances or enter beneficiaries in order to catch one of the aforementioned creatures, there isn’t an obvious correlation. It all boils down to the underlying principle of gamification, which refers to the ability to use elements of game-playing, including video games, to influence human behavior. The application of this can be seen across many platforms and service providers from fitness trackers to education. In education, certain devices and games can be used to increase engagement in the classroom and help with long-term retention, which is due to the chemical dopamine being released in the students’ brains as they play. Just as gamifying the classroom can have a profound effect on learning, so too can it help employees reach their financial goals.

Money magazine points out that much of how we handle personal finances is already set up like a game, such as earning credit card points or boosting a credit score. This same principle could be applied to preparing employees for retirement, either by gamifying employee training with augmented reality devices that employ similar technology to that of Pokémon Go, or by leveraging mobile apps that give rewards to participants who use them. I’m not suggesting that if companies simply place fantastic, imaginative creatures into their employee benefits platforms, all of their employees’ financial problems will be solved. Rather, I believe it is a way to shift the paradigm of planning for retirement and increase preparedness across multiple generations. A recent study by Employee Benefit Research Institute, an organization focused on providing research and education on employee benefits programs, found that 54% of workers surveyed reported having less than $25,000 saved or invested for retirement. If there is a way to gamify the recordkeeping and administration of employee benefit plans, shouldn’t we make every effort possible to do so in order to help our employees and our clients’ employees be better prepared? The smartphone and mobile gaming revolution has provided businesses with opportunities to do just that.

Take the mobile app SaveUp, for example, which encourages people to save money and pay down debt. It does this by rewarding each person with credits every time they deposit money into a savings account or make a payment on debt. Those credits can in turn be used to enter raffle-style drawings for different prizes every day. These drawings include a monthly $2 million jackpot and a weekly $500 drawing, among other prizes. According to SaveUp’s CEO, these initiatives have led to over $150 million being deposited into savings accounts or used to pay off debt since the company was founded in 2010. Another similar program, called Save to Win, was launched in credit unions throughout Michigan in 2009 and led to almost $9 million in savings that year alone. These extrinsic reward programs encourage positive financial behaviors and have proven to help people become more fiscally responsible as a result.

Gamification will no doubt continue to be a powerful tool, whether it’s used for stimulating young minds, engaging people in their finances, or helping employees prepare for retirement. If personal finance apps such as these can garner even a fraction of the popularity that Pokémon Go has, it stands to reason that we can make serious headway in paying down the trillions of dollars Americans currently owe in debt and save more toward retirement.