A mere 10 percent of millennials are worrying about retirement, whereas nearly 30 percent of boomers are worried about retirement savings.

And they have good cause to worry: Many people approaching retirement have debt levels that will be a drag on their retirement income.

“All these findings demonstrate that employers need to consider broader financial wellness rather than only employees' and retirees' ability to achieve a target income replacement ratio,” said Betsy Dill, financial wellness advisory leader, Mercer.

Dill added, “No longer can we only push the 'contribute more or else' agenda because many individuals dealing with immediate needs feel they have to focus more on reducing debt than they do on making extra retirement contributions. Employees will receive far more value from receiving help in making the best decisions to suit their own financial circumstances—not necessarily focusing solely on their retirement plans.”

Mercer will further explore the topic in a webcast on January 14.

Here are 10 questions Mercer says that plan sponsors need to ask about their current retirement and financial offerings to their employees.

1. Are the programs offered to help employees address their financial needs understood and used?

Mercer points out that, although many large employers provide additional financial aids such as access to financial advice, tools that calculate retirement income, algorithms to recommend asset allocations, health advocacy for dependents and parents, and a range of voluntary benefits, many of these options are underutilized.

Employers need to assess which employee segments would benefit from these programs and how to connect those employees to benefits in optimized ways.

2. How different is the retirement experience of men and women likely to be in the company?

Women face workplace challenges that include lower salaries, more employment gaps, and longer lifespans, as well as retirement balances typically 30–40 percent lower than those of men.

Employers need to use analytics to understand these differences and develop targeted communication or support strategies to address these realities.

3. Is the existing investment lineup working for employees?

Employers should review their analysis of the retirement plan's participant demographics and investment behaviors and assess how appropriate the current investment lineup is for participants.

For example, custom multimanager options may provide participants access to greater diversification without adding complexity to the investment decision-making process.

4. Does the current retirement plan maximize tax efficiency—and do employees understand what that means?

The youngest employees in a company's workforce could potentially benefit from Roth contributions, rather than from a pretax election.

In addition, the ability to offer in-plan Roth conversions can increase opportunities for tax diversification and efficiencies, especially in combination with traditional after-tax contributions.

Employers need to consider what makes sense for their plan, and then be sure that employees have access to information that allows them to understand the current landscape.

5. How appropriate is the plan's default investment alternative?

In September, a Government Accountability Office report emphasized the importance of selecting and monitoring the retirement plan's default.

It also acknowledged many of the challenges plan sponsors face during that process.

Employers need to be sure that their plan's default is still a good fit for participants by analyzing participants and their needs.

6. What challenges arise from having retirement assets in multiple places?

Having all retirement balances consolidated in a single location can make managing retirement assets less complex for workers.

In addition, in-plan investment fees are typically far lower than those individuals must pay.

If employers are not already encouraging employees to consolidate retirement balances into their plan, they should consider it—particularly since higher assets within a plan drive down costs for everyone, through economies of scale.

7. When was the plan's capital preservation option last reviewed?

The second round of money market reform will take effect next October.

Recent reforms have not only reduced expected returns and made them less customer friendly, they've also caused potential implementation challenges for DC plans.

Plan sponsors should consider whether a money market fund remains a suitable option or whether other alternatives—such as stable—better meet objectives.

8. Are participants being helped to make better decisions at retirement?

“At retirement” optimization can provide significant benefits to retiring participants.

This includes making Social Security elections, medical coverage decisions, tax optimization, and decisions on when to draw from which retirement product.

9. Are environmental, social, and governance (ESG) factors a consideration for the investment lineup?

Younger participants in particular are interested in what is increasingly becoming an issue within retirement plans: sustainable investing.

Recent U.S. Department of Labor guidance has clarified the use of ESG factors in selecting plan investments.

Potential responses can range from explicit responsible investing/impact investing options to the consideration of ESG as a key factor in the selection of investment managers.

10. Are loans truly deteriorating the financial wellness of participants?

While it's true that participant loans can be a drag on participants' retirement readiness—something that plan sponsors are concerned about—sometimes the alternatives, such as credit card debt or payday loans, can do far more damage.

While it's important to monitor loan activity, plan sponsors must understand the reasons behind the need for participant loans.