There are several simple, concrete measures organizations can take to promote behaviour that gets Canadians thinking more about planning for their retirement, according to a report published on Friday in an Ontario Securities Commission (OSC) staff notice.
London, U.K.-based The Behavioural Insights Team (BIT), which is owned partly by the British government, prepared the research report, entitled Encouraging Retirement Planning through Behavioural Insights, on behalf of the OSC. The report explores the primary challenges people experience in moving from the intention to create a retirement plan to actually having one and offers simple, low-cost interventions to make retirement planning easier.
“Even the most organized [people] can find starting a retirement plan [to be] overwhelming. When it comes to taking action, our study identified several common behaviours that keep people from planning and some potential solutions that can be used to help simplify the process,” says Tyler Fleming, director of the Investor Office at the OSC, in a statement.
Common barriers identified in the report include the perceived length, complexity and overwhelming nature of retirement planning, as well as a tendency to ignore the future, be overly optimistic about savings and discount long-term needs.
Some interventions to counter these barriers include breaking retirement planning into a series of small steps, including:
- nudging people at moments when they are likely to be thinking about the future, such as milestone birthdays or when their children first start withdrawing assets from their registered education savings plan;
- highlighting the short-term psychological benefits of having a retirement plan in place, such has having peace of mind knowing their futures are under control; and
- prompting individuals to think about the friends and family they will be able to spend more time with in retirement, among others.
In addition, organizations could send a communication that makes retirement feel more real by including pictures of different ways that someone might be able to spend their retirement and prompting people to take action for the retirement they want.
The BIT adopted this approach in an initiative that took place in Scottsdale, Ariz. and found a 75% increase in the number of people who signed up for a meeting with a financial advisor as a result of the intervention. Specifically, people were asked “what kind of retirement do you want to have,” and there were two photos included: one of an elderly couple stressing over their bills, and another of a similar couple enjoying themselves on a boat.
The research findings and recommendations were developed based on a literature review and qualitative research with pre-retirement Ontarians and financial planners. Several of the approaches recommended in the report also were tested using an experiment involving a randomized control trial.
The experiment, which was conducted during a three-week period in early June in partnership with Ontario’s provincial government and the federal government, involved sending different messages to more than 70,000 Ontario public service employees encouraging them to use an online retirement income calculator.
This study is one of the initiatives outlined in the OSC’s Seniors Strategy, published this past March 2018. The research is also part of the OSC’s ongoing efforts to integrate behavioural insights into its work and develop evidence-based policy and programs.