by: Dennis Zuehlke, Compliance Manager, Ascensus
America Saves Week 2012 kicks off on February 19 with more than 1,000 organizations joining efforts to help individuals and families save money, build personal wealth, and reduce debt. And let’s be honest, Americans need help saving, especially when it comes to saving for retirement.
Nearly one-half of Americans feel unprepared for retirement and over one-third report that they are unsure how to achieve their retirement goals, according to ING’s Retirement Revealed survey—despite the fact that 75 percent of the respondents are employed full-time, have an annual income of $40,000 or more, and contribute to a retirement plan at work. A 2011 Harris Poll found that 34 percent of Americans have no retirement savings, and among younger Americans the numbers are even worse. Among Echo Boomers, those between the ages of 18–33, 33 percent have no personal savings and 53 percent have no retirement savings.
Saving for retirement has always been important, but it is even more so now, following the last economic downturn. Its impact has fundamentally changed the retirement landscape and created some disturbing trends.
- Americans have seen the value of their retirement plans and IRAs plummet because of losses in the stock market, and those close to retirement age may not be able to recover their losses before they retire.
- The steep decline in home prices has reduced the ability to use reverse mortgages and home equity loans to supplement retirement savings.
- Health care costs—which increase during retirement years—continue to outpace the rate of inflation.
- Many companies have eliminated defined benefit pension plans and reduced matching contributions to their employees’ 401(k) plans.
- The ballooning budget deficit is causing lawmakers to look at reducing Social Security and Medicare costs by increasing the minimum retirement age or reducing benefits.
In the current environment, with economic recovery a ways off, those who are saving for retirement need to save more, and those who have not started saving need to start immediately.
Chances are that most Americans will need help saving in order to achieve their retirement goals—and credit unions can help. The bulk of 2011 IRA contributions will be made between now and the April 17, 2012, tax-filing deadline. As America Saves Week kicks off this month, credit unions have a great opportunity to capitalize on the media blitz surrounding the event by marketing their IRA programs and helping their members save for retirement.
Last year, top media outlets, including TIME, The Wall Street Journal, and Consumer Reports, promoted America Saves Week and garnered over 15 million media impressions. Among financial organizations (including a number of credit unions) that participated in America Saves Week 2011, 24 percent of reporting organizations found higher than normal rates of saving/money market accounts opened and 3 percent found higher than normal rates of IRAs opened, according to the America Saves Week 2011 Summary.
Credit unions can sign up to participate in America Saves Week 2012 at www.americasavesweek.org. By signing up, you will receive news and updates and be listed as a participating organization. You’ll also have access to the 2012 Resource Kit, which includes sample press releases and newsletter content that you can use to promote saving. You can also market automatic savings programs that you offer, such as direct deposit and payroll deduction for making IRA contributions.
Saving for retirement has never been more important than now, when many Americans feel unprepared for retirement and unsure of how to achieve their retirement goals. But credit unions got their start in an even more difficult economic time by promoting thrift and the wise use of credit.
In today’s challenging economic times, you can help your members save for retirement by promoting your IRA programs and encouraging members to open and fund an IRA this year. Participate in America Saves Week and promote retirement savings. It will benefit your members and your credit union.
Dennis Zuehlke is Compliance Manager for Ascensus in Middleton, Wisconsin. Mr. Zuehlke provides clients with technical support on tax-advantaged accounts (including individual retirement accounts, health savings accounts, simplified employee pension plans, and Coverdell education savings accounts), and information reporting and tax withholding issues. Mr. Zuehlke is a frequent national speaker on compliance-related issues and retirement savings trends within the financial services industry.
Mr. Zuehlke attended Marquette University and graduated from the University of Wisconsin. Before joining Ascensus, he held a similar position with the Credit Union National Association.
Ascensus delivers a full range of retirement plan services—including plan administration, plan design and maintenance, consulting, web-based tools and content, software solutions, education and training, forms and documents, and technical resources—to approximately 9,000 financial organizations nationwide. www.ascensus.com