Your guide for helping savers navigate 5 career checkpoints

On the road to retirement readiness

This is an ideal time for advisors to help young savers establish behaviors to help boost their retirement readiness. This is an ideal time for advisors to help young savers establish behaviors to help boost their retirement readiness.

During National Save for Retirement Week, the retirement industry shines a light on the importance of saving for retirement through employer-sponsored plans. Throughout the week, savers will receive information and tips to help them boost their retirement readiness.

While some actions are universal for all savers, everyone’s saving situation is different. Some people are just entering the workforce. Some may be changing or recovering from a job loss. And others are in the middle of their career or close to retirement.

Here are five career checkpoints for advisors to consider when engaging clients and helping them save in their employer-sponsored retirement plan at specific career stages:

Young Savers

Young savers may think they have all the time in the world to save for retirement.  It can be tempting for those who are new to the workforce to spend their entire paycheck, particularly if they have debt or other spending priorities.

This is an ideal time for advisors to help young savers establish behaviors to help boost their retirement readiness now and in the future. As soon as it’s available, young savers should enroll in their employer-sponsored retirement savings plan and save at least up to the company match.

If your client’s employer does not offer an employer-sponsored retirement plan, encourage savings in an individual retirement account (IRA). Advisors can also provide retirement education on the importance of creating a budget to help manage and prioritize expenses so clients can start making retirement savings a priority too.

Changing Jobs or In Between Jobs

It’s not unusual for people to have several jobs over the course of their career or experience a job loss at some point. While nearly 60 percent of workers feel they would be prepared if something disrupted their income for the next year1, this may also be a time where savers may be tempted to borrow or take money out of their plan.

Advisors should provide clients who are experiencing this transition with complete information about loans, including tax implications and/or penalties they might incur if they make the decision to take money out of their plan.

See the infographic, “5 Career Checkpoints on the Road to Retirement” here.

It’s important to encourage clients to build emergency savings to cover a few months of expenses so they don’t have to dip into their retirement savings. Those coming into a new job from a different company should consider an employer’s retirement plan offering as part of their overall compensation package.

Mid-Career

Clients at this stage may be saving for a new home, paying off debts, making mortgage payments or other major expenses. Encourage clients to resist the temptation to decrease contributions or stop saving all together.

Help them take a holistic look at their entire savings picture including current savings contributions, expenses and the investment lineup in their retirement plan. Help them assess opportunities to continue their retirement savings momentum like automatic escalation.

Investment options like target date funds can help mid-career savers experience less volatility with investments and stay the course for the long-term savings.

Career Advancement

Encourage clients who are enjoying success at work to save more as they make more. Saving even a portion of any extras from bonuses, salary increases and other cash inflows instead of adjusting their living standard can lead to significant gains that will benefit them in the long run.

Savers should also be aware of other savings and investment options outside of their employer-sponsored retirement plan that are a fit for this career checkpoint.   

Near Retirees

More than 8 in 10 (84 percent) of older boomers who feel prepared for retirement say they have a guaranteed income source they can depend on. And 63 percent say they feel they have saved enough to cover retirement expenses1.

Savers approaching their retirement years should consider income guarantee investment options. It’s also important to help them understand their social security benefits in addition to the other income sources they’ve secured along their savings journey. Advisors should encourage near retirees to continue saving and to ensure their expenses are fully paid so they can enter retirement debt-free.

Guiding clients through every career checkpoint can help them take actions that lead to better retirement outcomes. Advisors play a valuable role in helping people get to and through retirement.

Use National Save for Retirement Week as a reminder for clients to schedule an annual retirement plan review. And help them take advantage of every opportunity to optimize their participation in their employer-sponsored retirement plans.

See the infographic, “5 Career Checkpoints on the Road to Retirement” here.

 

[1] Lincoln Financial Group M.O.O.D. of America Study 2014

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