Navigating Retirement Planning: Strategies for 2025

Retirement & Private Wealth Construction Construct a resilient future using a strong risk In a time of transformation, retirement plans will become even management approach as a blueprint for success. more fundamentally linked to financial wellbeing and private wealth management will focus on fundamentals. Risk & Insurance | Employee Benefits | Retirement & Private Wealth Risk & Insurance | Employee Benefits | Retirement & Private Wealth

What to Expect in 2025 What to Expect in 2025 As employers embrace financial wellbeing, they are optimizing retirement plans, leveraging SECURE Act 2.0 (Secure 2.0) to ensure compliance and best practices, while smaller businesses will consider offering a startup plan. Meanwhile, afÒuent individuals will need to update estate planning in light of upcoming estate tax changes, and possibly reevaluate their investment strategies — such as considering alternative investments — as interest rates fall and markets stabilize. 75% 60% of employers say worker of employees aren’t financial stress hurts their confident they’ll be able to 1 2 business operations. retire by ages 65 to 67. 1. PNC, 2024 Financial Wellness in the Workplace Report: The Evolving Needs of the Multigenerational American Workforce, August 28, 2024. 2. SHRM, “Most Employees Don’t Think They’ll Retire by 65,” April 29,2024.

Plan viability With improved According to the HUB International 2025 Outlook Executive 5 Survey, 37% of employers identify needing additional support engagement and from third-party plan sponsors to increase participation with the plan, and 36% say they are emphasizing internal additional features, communications to increase enrollment. Similarly, 36% are 6 leveraging auto enrollment and 35% are using counseling to retirement plans in boost participation. Education and communication are important to boost plan 2025 can do more enrollment, but it’s important to provide resources that align with individual preferences and needs. That means for employees and understanding how individuals want to receive education and information — and not just assuming specific generations employers. want information delivered in a single manner. The past two years have largely seen employers try to A knowledgeable plan advisor can help identify employees’ digest the changes from the landmark SECURE 2.0 Act. The financial situation and provide solutions that will result in legislation has transformed retirement plans with operational higher participation and viability. For example, knowing what changes and added features such as start-up tax credits that Millennials want versus Generation X employees want can are increasing the ability for employers to offer plans. help identify what changes to the retirement plan will boost participation. In 2025, plan sponsors will have the opportunity to take some of Secure 2.0’s lesser-promoted features and help cement financial wellbeing in a diverse workforce. For 3. PNC, 2024 Financial Wellness in the Workplace Report: The Evolving Needs of the Multigenerational American Workforce, August 28, 2024. example, employers can match their employees’ student 4. U.S. Bureau of Labor Statistics, “1974 – 2024: Celebrating 50 Years of loan repayments within their 401(k) plan, and they can Protected Retirement Plans,” accessed September 23, 2024. create emergency savings accounts linked to their defined 5. HUB’s Outlook Executive Survey polled 900 C-Suite and VP-level contribution plan. executives on the issues facing them on profitability, employee vitality and organizational resilience. 6. Numbers do not add up to 100% because survey respondents could Another important retirement plan enhancement is choose multiple options. guaranteed income through annuities within the plan or converting some 401(k) savings into an annuity. Although these options are available within a few retirement plans, Secure 2.0 makes them far more feasible for smaller Case Study organizations. School districts across the U.S. are using re- Providing employees with access to retirement income tirement plan matches to incentivize teacher solutions within the workplace plan can facilitate retirement recruitment and retention. In one instance, readiness, mirroring the guaranteed income that traditional a local school district worked with HUB and defined benefit pension plans offer. implemented an employer match and auto But although about 94% of employers offer a retirement enrollment — and saw a massive jump in par- plan, not all employees (81%) are enrolled. More than ticipation from 35% of the workforce to 95%. half of employers offer a company match for employee Higher engagement with the retirement plan contributions to a retirement plan, but almost three in 10 workers with access to the match don’t take advantage of can help cement employee relationships and 3 ensure improved retention. it. And fewer than 40% of low-wage group employees have access to a retirement plan.4 3

Vitality Financial wellbeing will become embedded in forward-thinking employers’ retirement plans and overall Case Study strategy. A HUB client with more than 8,000 employees wanted to improve its employees’ financial wellbeing. The client offered its As part of an overall competitive benefits package, financial employees HUB FinPath. The client was able wellbeing programs will become far more common in 2025, to pinpoint individuals’ specific financial reflecting employers’ desire to improve the workforce’s struggles and developed programs that vitality and help them prepare for retirement. included monthly in-person events and Too many workers are spending valuable time worrying provided access to financial coaching and about their finances while on the job, resulting in decreased online tools. The result: improved financial productivity and diminished retirement readiness across wellbeing and higher productivity. the workforce. A large majority (77%) of Americans worry about finances, with 58% saying that finances “ruled their 7 lives.” Meanwhile, 57% of employees at mid-sized and large organizations are not confident they’ll be able to retire 8 between the ages of 65 and 67. What is essential is that different generations in the Only half of employees who are financially stressed say workforce are at different points in regard to their finances. they’re energized at work. More concerning, 36% of the Reaching them with personalized solutions can mean same group expects to look for a new job — twice as many the difference between a workforce that’s stressed out as non-stressed employees. And employees are asking for financially and one confident in its financial future, allowing help, as nearly three-quarters of them want assistance on them to be more focused on the job. 9 financial matters. Programs like HUB FinPath help employees manage their Employers have noticed — one estimate posits that by finances, adding an additional layer to existing financial 2026, nearly half of employers will offer a comprehensive wellbeing initiatives that can solidify workforce engagement. financial planning program for their employees, with about Such programs, which combine digital offerings with real- 60% of employers offering housing assistance, credit world advice, can deliver solutions grounded in employees’ 10 needs for employers of any size. improvement programs or both. Such programs have become almost table stakes in competition and retention for talent. 7. CNBC, “77% of Americans are anxious about their financial Larger employers with ample resources can provide situation — here’s how to take control,” May 20, 2024. financial wellbeing programs that provide everything from 8. SHRM, “Most Employees Don’t Think They’ll Retire by 65,” April 29, 2024. an online portal to personalized counseling. But even 9. PwC, “PwC's 2023 Employee Financial Wellness Survey,” accessed then, often financial wellbeing is not part of a holistic, September 17, 2024. comprehensive strategy that integrates the retirement plan 10. Transamerica, Transamerica Prescience Report, accessed and other offerings. September 17, 2024. 4

Resiliency Employers will focus on nuts-and-bolts issues in 2025 to keep their retirement plans healthy for the long term. Compliance and performing due diligence aren’t exciting Case Study topics, but adopting or maintaining best practices in both A private equity operation needed to areas will be key to avoid litigation, regulatory action and consolidate retirement programs for its cybercrime in 2025, helping ensure a retirement plan’s long-term future. different portfolio companies — otherwise, the PE firm would have to complete To start, there’s the trend of keeping former employees on expensive annual non-discrimination the retirement plan, even if they’re still working at another testing for each retirement plan. HUB was organization. It’s a small step to lower costs through able to untangle the thicket of regulatory economies of scale and stay resilient. However, there are risks such as administrative complexity and litigation requirements, merge the retirement programs that plan sponsors should carefully consider and manage and set the private equity firm up to leverage to ensure compliance and maintain the organization’s scale for the future. financial health. Another trend is the increase in the use of an “active/ passive mirror” approach to plan investments in which both active and passive investing options are represented investments, services and costs on a regular basis. in all asset classes. About 45% of defined contribution Pay ongoing attention to the plan’s IPS. Steer clear of plans reported a mirror approach in 2023, the highest ever. potential litigation risks related to high fees or inadvisable investment options and maintain standards for plan Critical fiduciary actions that most defined contribution participation levels as well as competitive investment plans are taking in 2024 include reviews of plan fees (74%) performance. and a review, update or implementation of the plan’s investment policy statement (IPS) (66%). Also noteworthy In addition, retirement plans — in concert with their plan is the increased use of open architecture for greater advisors — should review with their plan advisors any 11 service provider’s track record on cybersecurity, including transparency and flexibility. their standard practices and audit results and ensure they Cybersecurity presents another challenge to plan have risk management measures that will help keep the resiliency, which can affect individual accounts but attract plan sponsor safe. possible litigation or government action. The risk involved makes compliance essential. Any retirement plan needs to be run in accordance with the 11. Callan, “Focus on Plan Governance, and Continued Efforts to Rein in Fees,” April 24, 2024. plan document and to keep within the U.S. Department of Labor’s fiduciary governance standards. ERISA also requires that fiduciaries monitor, or review, their plan’s 5

Private Wealth Staying current with estate plans and investment strategies will help make 2025 a success. The estate tax exemption — currently $13.6 million per individual and double that for couples — will be halved starting on January 1, 2026, which has dominated discussions between high-net-worth individuals and their advisors for the past two years. One way to avoid tax headaches is through trusts such as irrevocable life insurance trusts (ILITs) and spousal lifetime asset trusts (SLATs). Although the grantor of such trusts will lose control of the assets, the wealth is shielded For other investors, alternative investments include from taxation for the benefit of loved ones or favored “buffered” ETFs that cap gains but limit losses; and a philanthropic organizations. covered call strategy that involves equity investments that produce income while still generating capped equity gains A downside to such a strategy is that individuals will and a floor for losses. Investment companies have noticed need to have their assets appraised and the trusts set the trend and are offering mutual funds that mimic a up in 2025. Not only will it be difÏcult to find last-minute covered call strategy. resources to handle the paperwork and legal issues involved in starting a trust, but there’s also concerns that there will be long waiting periods for appraisals, especially 12. S&P Global, “U.S. Equities Market Attributes October 2024,” toward the end of the year. November 5, 2024. 13. J.P. Morgan, “A tale of two markets: Divergence amid the post– For investors, things may become more stable after several Labor Day sell-off,” September 6, 2024. years of uncertainty. Through October 2024, year-to-date 12 returns for the S&P 500 stood at 19.62%, though bond yields are low and will likely fall further with interest rate 13 reductions from the Federal Reserve. For many investors, the current environment may probably favor traditional portfolios of 60% stocks and 40% bonds, achieving diversification based on the negative correlation between stocks and bond returns. But increasing numbers of high-net-worth individuals are also investing in alternative vehicles such as private credit, venture capital and private equity. 66

Navigating Your Next Steps Navigating Your Next Steps HUB construction insurance, risk management and employee benefits HUB retirement and private wealth advisors will work with you to develop specialists will work with you to develop a tailored strategy that will protect a tailored retirement plan that protects the bottom line, supports your the bottom line, support your workforce and build resiliency for 2025. Here workforce and builds resiliency for 2025. Here are some initial considerations: are some initial considerations: Provisions in Secure 2.0 and other developments will give Making risk management a pillar of your organization’s culture employers the opportunity to increase participation and Rethink the can help identify exposures and develop response plans in case Develop a improve employee engagement. Plans need to be re-evaluated retirement plan of any type of incident, whether that is a weather-related event, 1 comprehensive to meet compliance standards and achieve organizational goals, 1 with a trusted a threat of physical safety or a cyberattack. Make sure your risk plan. while organizations without a plan must consider one to stay advisor. broker understands how to approach risk and can identify gaps competitive. A trusted advisor can help you make sense of the in insurance that could disrupt your daily operations. new environment. Retirement readiness doesn’t just mean having a 401(k) plan. Often, To compete for a shrinking pool of skilled labor, personalized benefits Integrate employees need guidance on saving, managing debt and having Create a based on HUB Workforce Persona Analysis and data analytics can financial realistic financial goals. A holistic financial wellness program will personalized help your company differentiate itself from the competition. Creating 2 wellness with not only help your employees reduce financial stress but improve 2 benefits a quality employee experience (QEX) will boost engagement, improve retirement retirement readiness. Tools such as HUB FinPath give employees strategy. recruitment and retention and promote worker wellbeing readiness. individualized ways to help achieve financial wellness. Remain Safety is already the focal point of your operation, but with Reinforce Talk to your plan advisor about how to cope with a changing focused on an influx of new and less-experienced workers, injury risks 3 retirement plan regulatory environment, meet fiduciary responsibilities and 3 workplace increase. Work with a risk professional to review your safety resiliency. avoid costly litigation. Acting now to make your plan more safety. program at least annually and address any issues. resilient will pay dividends over the long haul. Stay in contact with your broker and let them know about Prepare for Individuals need to plan for the new estate tax exemption, and Be transparent changes to the business to eliminate surprises at renewal. changes in in the face of unstable stock and bond markets, they’ll need to with your Review exposures and insurance needs at least 90 days prior 4 estate planning adjust their portfolio strategies. HUB’s Private Wealth advisors 4 broker. to policy renewal to allow your broker to find the optimal and investment can help you avoid the estate and investment pitfalls you’ll face coverages for your organization. strategies. in 2025. 7 7

HUB Retirement & Private Wealth When you partner with us, you’re at the center of a vast network of experts who will help you reach your goals. For more information on how to manage your insurance costs, reduce your risk and take care of your employees, talk to a HUB retirement private wealth specialist. 10,000+ employer sponsored plan clients $143B in qualified and non-qualified plans $29B private wealth assets under advisement Stay up to date Subscribe to receive risk and insurance insights and event invitations throughout 2025. Subscribe HUB International Limited (“HUB”) owned RIAs provide investment advisory and management services to its respective clients, under the general trade name of HUB Retirement and Private Wealth. All current HUB RIAs maintain a combined total of $172,292,249,664 in aggregated regulatory assets under management (“Aggregated AUM”), based on the reported AUM for each respective individual HUB RIA effective as of December 31, 2023. The AUM for each individual HUB RIA may be found in the respective Form ADV for each respective HUB RIA. This Aggregated AUM for all HUB RIAs are broken out as follows: $109,326,671,524 in nondiscretionary institutional AUM; which AUM primarily represents qualified retirement plan assets (both ERISA and non-ERISA plans), non-qualified plan assets, and other types of institutional assets. $33,455,679,298 in discretionary institutional AUM; which AUM primarily represents qualified retirement plan assets (both ERISA and non-ERISA plans), non-qualified plan assets, and other types of institutional assets. $29,509,868,842 in Private Wealth Client AUM; which is a combination of both discretionary and non-discretionary AUM. hubinternational.com