The end of retirement?

CBSI’s Niemann Urges ACUC Audience to Help Members Navigate Changes

SAN FRANCISCO, CA — Retirees’ increasing longevity combined with demographic trends and some structural changes to the U.S. economy are colliding to create a perfect storm that is taking the luster off of the ‘golden years’ and raising credit union member concerns on income sustainability during retirement, CUNA Brokerage Services, Inc. (CBSI) speaker told an America’s Credit Union Conference (ACUC) Discovery breakout session audience Wednesday.

“Credit unions are facing major changes to their membership and their asset base,” said Hendrix Niemann, managing director of wealth management for CBSI. “Baby Boomers are starting to enter retirement, which means their money will be leaving the credit union as they spend down what they have saved and invested for 30-40 years. They will not be borrowing or depositing. Credit unions need to have a concrete plan in place for replacing those assets, and also for retaining the assets that are going to be passed on to the next generation.”

Niemann told his audience that in the past 800 years there are no documented examples of an economy that had to emerge from a financial crisis while simultaneously absorbing the effects of an aging population.

“Two-thirds of all the people in the history of the world who have lived past the age of 65 are alive today,” said Niemann. “People didn’t used to age. They died.”

Today, the average 65-year-old male has a 50 percent probability of living to be 85 years old with the average 65-year-old female living to be 87, which makes the average length of retirement at least 21 years. And, if the person is part of a couple, there is a 50 percent probability one of them will live to be 91, which makes the average length of retirement jump to 26 years, Niemann told audience members.

“Many people don’t realize it, but we’ve entered a new normal for retirement,” said Niemann. “The golden age of retirement is not coming back. Many credit union members think it will, but it’s not coming back.”

The Baby Boomers are the largest generation in U.S. history ever to retire – and the vast majority of them have not saved enough for retirement. As they realize this, many seniors are postponing retirement or re-entering the workforce.

“The Boomers are relying on social safety net programs, such as Social Security and Medicare, that were never designed or intended for a large contingent of beneficiaries who will probably live 25 or 30 years – or more – in retirement,” said Niemann. “Those programs, under their current models, will be unable to pay the benefits seniors believe they are entitled to,” he added.

Today, there are 30 million fewer people in Generation X than in the Baby Boomer generation, which means 30 million fewer people paying into the retirement system for this massive retiring population.

“The Millennial generation (Gen Y) is as big as the Baby Boomer generation, but they are far behind their Boomer parents in launching their careers, getting married, starting families and buying homes. This is largely because of a massive and still-growing student debt burden, which now tops $1 trillion, as well as lackluster economic growth since the recession ended five years ago,” said Niemann. “Ironically, their ability to pay into the system is also being hampered by their own parents, who are blocking their children’s path up the economic-ladder because of their own need to continue working.”

The effects of these demographic trends are exacerbated by fundamental changes to the U.S. economy that have come about since the 2008 financial crisis and the start of the ‘new normal’ economy we’re currently in, he added.

“The bottom line is this – what retirement looks like, or will look like, for those in retirement or about to retire may be a lot different than they thought it would be,” said Niemann. “There’s a very real and valid fear among retirees that they will outlive their assets or run out of money because their nest egg is simply not large enough, particularly because they have not saved for out-of-pocket health care costs in retirement that are not covered by Medicare.”

Niemann told his audience they can expect these fears to escalate among members as credit unions’ membership continues to age.

“Members need credit unions more today than ever before, but they just don’t know it, yet,” said Niemann. “Most Baby Boomers don’t have a retirement income plan or a plan for funding long-term care. That’s where the credit union fits in. Credit unions have a major role to play in educating their members about these issues and helping them navigate the new normal environment.”

Niemann concluded his session by encouraging credit unions to help members, old and young, navigate these changes by starting the conversation.

“Don’t wait for members to come to you. Reach out to them. Ask members to visualize their future, and then help them figure out a realistic retirement plan,” said Niemann. “Credit unions have the knowledge, expertise, and resources to help members navigate these changes, but they can’t delay. They must start today.”

About CUNA Brokerage Services, Inc.:

CUNA Brokerage Services, Inc. (CBSI) provides broker-dealer services to credit unions throughout the nation, offering a full range of investment and insurance products to help credit unions help their members reach a more secure financial position.

CBSI, an affiliate of CUNA Mutual Group, is the leading broker-dealer serving the credit union marketplace. CBSI has more than 250 credit union programs, 400 active advisors, with more than $3 billion in mutual fund, annuity and managed account sales, and more than $140 million in annual revenue. In 2013, CBSI paid credit unions more than $65 million in fee revenue.

About CUNA Mutual Group:

CUNA Mutual Group was founded in 1935 by credit union pioneers, and our commitment to their vision continues today. We offer insurance and protection for credit unions, employees and members; lending solutions and marketing programs; TruStage® consumer insurance products; and investment and retirement services to help our customers succeed. More information is available on the company’s website at

CUNA Mutual Group is the marketing name for CUNA Mutual Holding Company, a mutual insurance holding company, its subsidiaries and affiliates. Life, accident, health and annuity insurance products are issued by CMFG Life Insurance Company and MEMBERS Life Insurance Company. Property and casualty insurance products are issued by CUMIS Insurance Society, Inc. Each insurer is solely responsible for the financial obligations under the policies and contracts it issues. Corporate headquarters are located in Madison, Wis.

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