PALO ALTO, Calif., June 22, 2009 – Financial Engines today introduced the Retirement Checkup, a simple and effective phone consultation with a Financial Engines Advisor focused on helping near-retirees update their Retirement Plan. The service was designed in light of the recent market downturn to help participants understand where they stand with their investments, savings and retirement income plans and help make the needed changes to recover from 2008. Early results show that by having a Retirement Checkup, 73% of participants update their retirement plan.¹ Furthermore, the median retirement income forecast increased by 20% for Checkup recipients who have been in managed accounts long enough to receive an initial forecast.²
The Financial Engines Retirement Checkup is targeted to participants age 50 and older who have their portfolios managed by Financial Engines. Financial Engines advisors work with near-retirees to complete their retirement picture by reviewing all sources of savings, all investment accounts, as well as additional sources of income earmarked for retirement. With this total-portfolio view, the advisor helps the participant adjust their retirement strategy by explaining different investment and savings strategies and retirement income goals. The advisor implements any resulting investment changes and sends the participant an updated Financial Engines Retirement Plan reflecting the new strategy. The process is designed to be fast, easy and impactful, where an effective recovery strategy can be determined in one focused phone call that requires little preparation on the part of the participant.
“More than one-third of Arch Coal’s workforce is over 50, and they are concerned about what current market events mean for their retirement outlook,” says Courtney Turney, Retirement Plans Supervisor at Arch Coal Inc. “As a company we are committed to providing retirement help for our employees and are pleased that Financial Engines is addressing the unique needs of different segments of our employee population.”
The Retirement Checkup will be available at no extra charge to participants who have their accounts professionally managed by Financial Engines and will be broadly deployed in July of 2009. Of the 300 Retirement Checkups conducted to-date by the company, seventy-three percent of the Retirement Checkup recipients updated their retirement plan. Recipients made the following changes:
- Retirement Age: 48% changed their retirement age, with 66 being the new target retirement age.
- Savings: 22% decided to increase their savings rate, with the median increase equaling 3% of salary.
- Total Retirement Picture: 30% had the advisor take into account other savings and investments towards their retirement goal, with most of these recipients including two additional accounts earmarked for retirement.
- Risk Level: 15% personalized their risk preference and 20% personalized their company stock preferences from a range of 0 to 20%.
Through the use of its forecasting technology, Financial Engines is able to give participants a realistic view of how the decisions they make during the Retirement Checkup can impact their retirement outcomes. Retirement Checkup recipients who were in the managed account program long enough to receive an initial forecast saw a forecast improvement in their portfolio value, as well as projected retirement income. Projected improvement in median portfolio value at retirement is 15% or $32,000. The projected improvement in income at retirement is 20% or $6,200 per year.³
“The market losses of 2008 were painful and investors won’t be able to asset-allocate their way out of the losses they suffered,” says Ken Fine, Executive Vice President of Marketing, Financial Engines. “However, there are concrete things near-retirees can do to recover, but they need help to do this.”
Seventy-four percent of participants surveyed agreed that they feel more confident because they have a plan to reach their retirement goal after taking part in a Retirement Checkup. Seventy-nine percent felt the ability to speak with a licensed advisor was important. Furthermore, 82% of participants surveyed indicated that it was important to have help creating a retirement plan that considers all of their sources of retirement income, including other accounts and social security.4
Investors who took advantage of the Retirement Checkup tended to be less than 10 years away from retirement and had higher salaries, balances and savings rates than the average managed account member. The average age of those who took advantage of the Retirement Checkup was 57. Retirement Checkup participants have an average account balance of $137,000 and a median salary of $64,000. Near-retirees also have noticeably higher contribution rates: 8.4% versus 5.7%.
The Retirement Checkup is part of the company’s broader initiative to provide American workers with Retirement Help for LifeSM services.