On February 8th, National Underwriter reported on a retirement decisions hearing organized by the Senate Committee on Health, Education, Labor and Pensions. What the committee found was that financial literacy in this country was dismal.
The residue left by the lingering effects of the Great Recession has not just made austerity fashionable again; it has opened up the eyes and perked up the ears of people all across the country and got them paying attention to their long-term personal financial plans.
There is a huge opportunity to be capitalized upon for financial advisors and life insurers alike. The work force of Generation Y has been inundated with tales of financial ruin; they have seen their parents and co workers delay retirement due to decimated 401(k) and IRA plans; they are watching pension battles with public employees being played out on the news every night, and they are constantly being reminded that by the time they retire, Social Security will be insolvent.
Prior to the events of the last couple of years, save for a few accounting and finance majors, retirement planning for workers age 18 to 33 was something that very rarely went beyond the average 401(k) plan and life insurance policy. Even now, as the Senate committee found, public understanding of these programs is rudimentary at best. Yet there is a pervading feeling among workers from Gen Y that they need to supplement their existing retirement saving plans, if they have them. And if they do not, they need to enroll.