Did you know that almost half of all Americans have no retirement savings at all? This is an alarmingly high amount of people who have not been able to plan for their future. This week is National Retirement Security Week, designated to helping people put themselves in control of their future finances. This important week sheds light on the problems American’s have in saving for retirement, and actions that can be taken to increase that statistic.
One-third of the American population has an income of $28,000 or less, which makes it extremely difficult to save for retirement. With all the monthly expenses that people have such as rent/mortgage, groceries, and utilities, the one thing they can put off is retirement savings.
One effective way to help credit union staff, members and those in your communities understand what life might be like after retirement is through the Foundation’s “Retire on Track” Retirement Fair program. This is a goal-oriented and interactive experience, similar to Reality Fairs for teens, that allows participants to imagine their life in the future to better focus on a present plan to get there.
This program is designed to help members at all stages of their life, no matter what their current retirement savings situation may be. The fair encourages participants to think about the lifestyle they wish to maintain in retirement, and develop savings goals to help them where they want to be. These fairs can be conducted at your credit union, or can be done in your community through partnerships with local organizations. It is a powerful exercise that helps individuals at to understand where their finances should be upon retirement.
The good news is, many people believe they will never have enough saved for retirement but they may be wrong. “Most retirement planners tell people they will need to save 80% of what they are earning before retirement,” said Mark Lynch, Senior Program Manager at the Foundation. “In reality, the average person only needs to save about 50%-60% of their income.”
The reason for this lower percentage is the expenses that individuals are paying before they retire may no longer exist in retirement. For example, many people have their houses paid off, and they save costs associated with work such as gas, eating out for lunch, and wardrobe. One of the biggest reasons is actually saving for retirement itself! In the last few years working, many people cram to save 20% of their income for retirement. Another large reason is taxation, individuals who are in retirement pay a lot less in taxes.
This information tells us that the real power of the Retirement Fair is that it helps people work out what their percentage is, depending on their circumstances. It helps credit union members, staff and others to get a really good picture of what they plan to do in retirement, and work back from there to see how much they need to save.
While Retirement Fairs are a great tool for helping your members save for retirement, there are other ways to help members to save. A great example of one credit union who is doing great work to help people with retirement savings is Sunmark Federal Credit Union in New York. Sunmark FCU hosts “Speed Savings” events, where members and non-members can sign up in advance to attend the event. Set up like speed-dating, attendees visit different booths and learn about lending, insurance, mortgage and savings (including retirement) with Sunmark FCU. This is an experience designed to help those in attendance who may do their banking somewhere else to see how much the credit union can save them. If they have a positive experience, they can make an appointment to come back and talk with someone, especially with a retirement planner.
So, if a non-member learns that the credit union could refinance their auto-loan and mortgage, saving them $150 per month, that is $150 that person could put towards retirement savings. This is a great way to help those who may not be saving enough for retirement, or saving any at all because of their monthly expenses.
NARPP’s National Retirement Security Week has many resources to help you reach members of all ages in saving for retirement. Click here to see some of those resources.
If you are interested in learning more about Retirement Fairs, you can watch this short video highlighting a fair and the impact it had on participants. You can also visit the Foundation’s website ncuf.coop to see how to download your own “Retire on Track” Guide and Materials. Together, we can work towards improving financial security for everyone.