Members Need a Push to Prepare for Retirement

Gary Peterson, CUNA Mutual Group
June 10, 2005

It is amazing how many people do not have any type of plan for retirement. Even more amazing, many people do not even have a plan for saving now or for the future.

Recent research by SunAmerica found that about 20% of young individuals and almost 14% of middle-age individuals have not started saving for retirement. SunAmerica defined "young" as age 37 to 46, and "middle age" as age 47 to 55.

As trusted financial partners, credit unions are well positioned to help members identify opportunities to save for retirement. Here are a few ways you can encourage members to build financial security into their future and cement your standing as their primary financial institution:

• Review loan balances and look for ways to consolidate outstanding balances to free up money that could be placed in saving instruments such as certificates of deposit or IRA programs
• Review IRA balances and contribution history to look for ways that members can increase their savings amount. You can use web calculators to show what just a few extra dollars a year can mean to a person's account over a specific period of time.
• Use newsletters and quarterly statements to invite members to review their savings situation. Any time is a good time, and it’s never too late to get started.

When it comes to saving, basic issues need to be addressed first. Based on the hierarchy of needs, an individual first needs to cover immediate expenses, and then save money for emergencies—six months' worth is the recommended time frame. After these needs are satisfied, any additional money available can then be saved for retirement.

As a group, middle-age individuals are a major concern for the government and the financial planning industry because many are approaching retirement with little or no retirement income or savings. These individuals may not be able to afford to retire. It is this group where credit unions should concentrate efforts to help these people save and plan for retirement.

There are numerous articles and programs in the media about how to save and plan for retirement, but no matter what strategy one chooses, getting started seems to be the biggest hurdle. By helping your members with their retirement and savings needs now, your credit union is building a relationship for the future.

Gary Peterson is manager of the participant support unit for pension services at CUNA Mutual Group, a chartered financial consultant and a certified life underwriter. This story first appeared in CUNA Mutual Group’s online publication called Added Dimensions at http://www.cunamutual.com/cmg/addedDimensions/ home/0,1775,9057,00.htmland is reprinted with permission.