The goods behind good experience

Considerations and Challenges of Retirement Planning UX

While digital experiences around saving for retirement are slowly coming along, in many ways, the field is still lagging behind the times. Important content is convoluted and users struggle to gain a realistic overview of their financial picture. As Shlomo Benartzi of Harvard Business Review (1) puts it, “Retirement Planning Needs a Better UX.”

Retirement portals are systems loaded with complicated content and designing a practical, enjoyable retirement planning platform can be a tough endeavor. Here are some of the key considerations, challenges, and learnings we’ve gathered from our work designing retirement-related portals.

Image Source: Personal Capital via Finovate.com

Design for Flexibility

When it comes to retirement planning, there can be countless plan types, variations of plans, and other content-related specifications that will affect the design of your product.

Does the participant have a traditional 401(K) or a Roth 401(K)? Does he have additional financial products with his 401(K) provider? What are the unique tools that users will need to manage each? What are the variants of each plan and what forms are associated with each version? It’s important to iron out these types of details early on in your design process, as they’ll dictate everything from content management to page layout throughout the project.

Be sure to design for flexibility and not to pigeonhole yourself with a static design. Considering all of these unique variations will not only better cater personalized experiences to your users, but will also reduce your headaches internally.

Context is Critical

There’s a big difference between a 25 year-old just starting to contribute to his 401(K) and a 65 year-old getting ready to withdraw. Each of these users has different goals when coming to your site and each of them needs different questions answered. They interface with technology differently and have differing expectations for the delivery of content. A push notification with an attached PDF of a recent statement may work for the millennial while the Baby Boomer still prefers quarterly letters with a paper copy. Consider providing customized, dynamic content where possible and allow users to easily personalize their preferences.

Delivery of Content

In general, retirement planning is complicated and technical, but we need to remember to be human in how we deliver this content. As a result of the complexity, people often look to financial advisors or savvy coworkers to offer up tips or even manage their finances completely; the user is ultimately left feeling ineffectual about their own future. This is where you come in.

Image Source: Transamerica.com

Put your users in control with simple, digestible information and tools that are explained in as layman’s terms as much as possible. Understand how your users think about different aspects of your product and mirror their language. Provide clear calls to action and explicitly display the results of actions. And of course, avoid disclaimers and legal jargon whenever possible.

Still, it’s important to remember the balance between making tools easy to use and unintimidating while still having them provide value and bring something to the table. As human and relatable as the experience should be, it also needs to be substantive, actionable, and useful.

Readiness and IRRs

“Will I be ready for retirement?”

That’s the golden question that everyone seems to want answered when it comes to his or her savings.

But what does it really mean to be “retirement ready?”

Most retirement portals use income replacement rate (IRR), or your savings as a percentage of your current income, as the main measure of preparedness, but IRR has its major flaws. For one, people can’t always conceptualize their money in such an abstract way. While dollars and cents make sense (no pun intended) to users, replacement rates can be too far removed from reality to resonate.

Most tools use a 70%-80% IRR as an acceptable level for a retiree, but what variables does this factor into the equation? Social security? Length of retirement? Spouse? Is 80% of a pre-retirement income enough money to get someone’s daughter through her last two years of college? It’s also important to consider whether you offer a holistic view of readiness or if you’re giving an evaluation at the plan level.

Additionally, according to some sources, these estimates are failing to accurately calculate the cost of future medical services. Citing a HealthviewServices report (2) on IRRs, Rebecca Moore of PLANSPONSOR (3) explains, “Retirement savings based on income replacement ratio (IRR)-based calculators risk falling short of meeting retirees’ goals because IRRs significantly underestimate future retirement health care costs…”

The report also suggests that, “A 55-year-old male with an average life expectancy of 86 who lives to age 88 will be responsible for an additional $69,627 in health care costs that are not included in top-down IRR-based calculations.”

In implementing a system such as IRR-based readiness, accuracy is paramount, lest we set our users up for a financially strapped and medically challenging retirement.

Giving Advice

Providing financial advice can be a really nice way to garner trust and increase user satisfaction, particularly for those less informed retirees. However, legally, you may not be allowed to do so. It shouldn’t be surprising that telling people what to do with their whole retirement savings can present some tricky legal hoops to jump through.

Image Source: Betterment.com

If you can’t, think about alternative ways to guide your users into making smart, confident decisions with their money. Can you tell them what other people in their financial situation generally do? Can you use an “Experts say:” module?

Regardless of the technique, providing clear calls to action with explicit options and outcomes is the next best substitute for not giving personalized advice.

Interface Considerations

While it’s critical to think about the macro-level context of your users – their needs, their retirement savvy, their interaction with technology – it’s also essential to consider the specific contextual decisions that are made to the interface.

For example, University of Chicago Professor Richard Thaler and Benartzi conducted an experiment on Morningstar.com (4). They asked participants to reallocate their retirement savings among eight different funds. For one testing group, the website displayed four available funds to contribute to with a link to add more. For the other testing group, all eight funds were presented outright. Only 10% of participants shown four funds actually selected to add more funds despite the task. Alternatively, this number quadrupled for the group shown all eight funds.

Benartzi explains, “This means that the level of diversification was driven, in large part, by a seemingly minor website specification, almost certainly chosen by someone with little investing expertise.”

Small interface patterns can dictate real behavior and consequently have big impacts on people’s wallets.

Current vs. Future Dollars?

$50,000 in 2015 doesn’t have the same value as $50,000 in 2055. When dealing with a platform that shows money spaced out over such long spans of time, inflation and other progressive value increases need to be considered.

For example, if you’re going to display a projected future balance, you should clearly indicate whether or not that value is in current value or future value. If you show both values, how will you indicate the difference and will you explain the rationale behind the future value? Additionally, how are you accounting for a 25 year-old’s salary? His $38,000 per year will certainly increase over the course of his long career and this increase needs to be accurately factored in to projections. We’ve found that users are keen on these types of details.

Categories: Experience Design
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