How the largest 401(k) plan is helping near-retirees: Q&A with Dimitra Hannon, Boeing's senior director of financial benefits and well being

We’ve all thought about what retirement could look like. Maybe you hope to settle down in a warmer climate or you’d simply like to spend more time with family. Whatever your ambitions, there are tough, real-world financial decisions that will shape your retired life.

Unfortunately, retirement doesn’t always look like the picture painted in television commercials. Too often we hear from retirees who wish they were better prepared. In fact, we recently commissioned a joint survey with the Employee Benefit Research Institute that found that 70% of retirees would tell their younger selves to save or invest more earlier. And that’s the same advice we have been hearing from retirees for decades – yet many of us still don’t take the advice. The reality is it’s very difficult to balance near-term goals with the long-term goals of retirement, especially right now when faced with the constraints of an inflationary economy. I hear from so many employers who worry that their employees nearing retirement haven’t planned for all the complexities that their next chapter will bring.

Helping people to better navigate their retirement income and spending needs is a key reason why we developed Income Beyond Retirement (IBR). This service helps employees develop a personalized retirement plan, providing a clear path for turning their savings into a steady stream of income in retirement, optimizing Social Security benefits and assessing spending capabilities. Most importantly, employees have access to an advisor to help them through these complex problems.

I sat down with Dimitra Hannon, senior director of financial benefits & well being at The Boeing Company*, the largest private defined contribution plan in the country and, among the first employers to offer the IBR service. We discussed the many complexities of retirement and how employers can better support employees through this transition and beyond:

Kelly O’Donnell: What are the top challenges near-retirees at Boeing struggle with as they prepare for the transition?

Dimitra Hannon: The challenge I see most often is that people struggle to maximize their assets in retirement. Even those who have saved extensively often don’t understand how that money is going to last in retirement or how it will be taxed. The cost of health care, for example, is an issue near-retirees tend to underestimate. Health care expenses can be massive, and many people don’t properly plan for how that might eat away at their retirement assets.

I find that many near-retirees are also unsure about when to begin taking Social Security and how to make investment choices in retirement. There are a lot of different retirement income scenarios, so figuring out which avenues will be most financially beneficial for you in the long run can be complex.

It doesn’t help that the current market environment is not ideal for retirement. With inflation and worsening market conditions top of mind, soon-to-be retirees are facing added stress about having enough to live in retirement.

Kelly: How do you think employers can best support employees preparing for retirement?

Dimitra: To navigate the uncertainty, near-retirees need to have a plan. Employees need to understand that they’re on the right trajectory. They should be answering critical questions, like where they’re going to live, how they’re going to deal with their assets, how to make the most out of their benefits and how to optimize tax strategies. Employers can make sure employees are given the resources they need to have a customized plan in place.

For employers, meeting people where they are and providing resources to help alleviate some anxiety during these key milestones is extremely important. Employee access to support like financial advisors is critical. It’s invaluable for employees to have the help of an expert when planning for retirement.

Kelly: What has been Boeing’s experience with our new service, Income Beyond Retirement?

Dimitra: What set IBR apart for us was its focus on being a personal experience, not a product. Retirement means different things to different people, and no one-size-fits-all product or strategy can serve all retirees. With IBR, all U.S.-based Boeing employees nearing retirement can speak with an advisor, and together, they can develop a plan that manages the employees’ anticipated needs while preparing for the unexpected.

The service takes a holistic approach to retirement planning while simplifying what employees need to do each step of the way. We’ve been pleased with the engagement, and it is good to know that trusted and qualified resources are a phone call away for our employees.

Kelly: Inertia can be a big problem when saving and planning for retirement. What has Boeing done to encourage employees to take positive steps?

Dimitra: To achieve the best outcomes, I believe employers need to offer the right plan and help set employees up for success. At Boeing, we have really strong participation in our 401(k) plan about 96% of our eligible population), largely because new non-union employees are automatically enrolled in our 401(k) plan. To help reach their savings goals, employees are enrolled at a 5% contribution rate, which increases annually until reaching our full match of 10%.

We also have policies to shield employees from unforeseen circumstances. If someone has an emergency and needs to take a loan from their 401(k), we’ve changed our plan to make sure they are not penalized. For example, should someone need to take a hardship withdrawal, the company match does not end for six months after the loan is taken out. It’s important that we don’t punish people for having a financial hardship, and instead, try to help them maximize their savings.

I have found employees can sometimes have an overly optimistic sense that “they will be OK” and forgo proper planning. Having access to an advisor allows employees to have conversations on where they stand and what they might need to do. Almost half of our employee population, nearly 67,000 employees, have conducted a retirement checkup with Edelman Financial Engines.

Kelly: Thank you, Dimitra. Boeing is a wonderful example of how an employer can make a huge impact on their employee’s financial well being and prepare them for success in retirement. We are so proud Boeing has selected us as a fiduciary service provider.

*Boeing selected Edelman Financial Engines as a service provider to make its advisory services available to Boeing plan participants, and Ms. Hannon is speaking in her capacity as a Boeing representative. Neither Boeing nor Ms. Hannon have been compensated for this interview.

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