As I passed through the big iron gates making the turn onto College Street, I had a sinking feeling in my gut. All the usual parental doubts flowed through my head: “How did we get to this point?” “Are we prepared for the next four years?” “Did we make the right decision?”
Sound familiar? I don’t think I’m alone in this situation.
It’s been eight weeks since I did the big “college drop-off,” and I’ve had some time to reflect on the whirlwind that has propelled us through this last year—and the decision points we came to as a family that will not only define the next four years of my son’s life but also help shape his future.
If I had to summarize the process of choosing a college, I’d say that it’s a unique combination of the quantitative and qualitative. On the quantitative side, there are many college rankings services, perhaps the most widely known being U.S. News & World Report Best Colleges. Parents and college administrators look to it every year, and it has helped steer many families to their final decision.
However, the ultimate decision of where to go to college is also based on a number of qualitative assessments, such as “Is it the right fit?” And better yet, “Are you following your heart?” But before our family arrived at that point, we poured through a lot of data. It’s the data that helps frame your decisions.
At Vanguard, our plan sponsors deal with a similar set of questions when it comes to decisions regarding their retirement plans: “Are my participants set up for success?” “Can we be doing something more as plan sponsors?” These are questions and decisions that may define their employees’ lives in retirement. Similar to the college selection process, there are many quantitative and qualitative considerations.
From a numbers perspective, as a way to help our plan sponsors measure how effectively their employees are using their retirement plan, we’ve developed the Vanguard Plan Effectiveness Index™ (VPEI). Learn more about VPEI here. VPEI measures two of the most common questions when considering retirement sufficiency: “Are my employees saving enough?” and “Are my participants invested appropriately?” It’s a simple, easy-to-understand score based on several underlying metrics. And it’s a score that plan sponsors can use to both benchmark themselves and track their annual progress.
From there, just as with the college selection process, plan sponsors can use the data as they discuss their qualitative decisions, such as, what role our retirement plan should serve in our overall benefits package, and whether we should take a more paternalistic approach to help set our employees up for retirement success or make it more of the employee’s responsibility.
Many of life’s important decisions come down to the balance of the quantitative and qualitative. At Vanguard, we’ve done all of the data work for plan sponsors with the development of VPEI. And, in the same way a guidance counselor might advise a college-bound high school student, our team of knowledgeable retirement experts are willing to talk plan sponsors through the qualitative considerations as well.
After all, just as our family’s college selection will help shape my son’s working years, his future employer’s retirement plan will help shape his retirement years.
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