Peer comparison drives higher retirement savings rates
President, Empower Retirement
July 27, 2015
If the 2008 presidential race was the “Facebook election,” then we’re headed straight into a next-generation presidential campaign that will eventually be decided — in large part — on social media. Each candidate is already being compared, contrasted and judged online by the media and mainstream America.
The current field of presidential hopefuls vying to win over millennials has taken retail politics to a new level. It’s easy to understand the motivation when you consider that 91% of millennials are likely to vote in the next election, according to a February poll by Fusion.1
Not only is there frequent press coverage when a candidate joins a new social media network, but there are also additional articles providing updates on which politicians are leading the way in terms of followers, as well as which candidates are active on the most platforms.2
What’s interesting is that while the tweets of the average American might not come with as much pressure to deliver performance metrics, people spend a lot of time comparing their life with that of their neighbors via social media. In fact, I’ll be the first to admit that, like many people, I find myself buried in my mobile device, browsing Twitter and LinkedIn and monitoring the engagement on my posts.
Retirement preparedness game changer
When it comes to keeping up with the Joneses, the world of retirement savings is not all that different. People have a desire to know how their efforts compare with the efforts of their peers. Showing participants this data can be a game changer when it comes to better preparing Americans for retirement.
In an effort to motivate people to create better retirement outcomes, we rolled out our How Do I Compare? feature, which is available as part of our enhanced Web experience on desktop, tablet and smartphone.
RELATED: Read more about Empower Retirement’s new Web experience for plan participants.
Data based on a sample of about 30,000 Empower Retirement participants shows that those measuring their retirement preparedness against the top 10% of people in their age, gender or income bracket increased their savings deferral rate by 25%.3
Note that when trying to encourage a behavioral change, it’s important to compare people with the top of the pack as opposed to simply showing averages. An upward comparison can be a strong motivator for change.4
Effective feature for younger crowd
Not surprisingly, the peer-comparison feature has proved to be especially effective with a younger audience. The average participant who took action after exploring the feature was under 40 years old.3How Do I Compare? is the type of enhanced platform feature that we hope will encourage younger workers to better prepare for retirement.
Unlike other generations, millennials have spent the majority of their lives using mobile devices, and they spend more time on social media than any other generational group.
And just as presidential hopefuls look to connect with younger voters, we’re looking to connect with millennials and encourage them to take action. We’re already seeing results from offering personalized features that help participants understand their specific preparedness for retirement.3
So do me a favor and share this blog on Twitter — or, better yet, favorite and retweet my post.
I’ll be keeping an eye out.