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Client-Friendly Report Urges Americans to Boost Savings

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As the April 17 tax deadline looms, sensitizing Americans anew to the state of their finances, a financial services industry consortium has released a report advising Americans on how to save for retirement and offering resources that might help them do so.

The report, released Monday, is timed to coincide with a host of financial awareness efforts, including this week’s Retirement Planning Week and April’s broader Financial Literacy Month and Financial Capability Month.

While the content of the report, called “Saving Early,” espouses principles that should be familiar to financial advisors, its ideas may spark discussions between advisors and clients. The report also contains links to tools advisors or their clients might find of interest.

The Financial Services Roundtable (FSR), which represents 100 of the largest financial services companies, together with the Financial Services Institute (FSI), an advocacy organization for independent advisors, and the Retirement Security Coalition (RSC), a financial literacy project of the FSR, collaborated on the report.

The report’s key message for consumers is “save early,” or as the consumer-oriented report’s opening line puts it: “The one vital component of retirement savings you can control is when you start saving.”

Financial Services Instiute CEO Dale BrownThe Financial Services Institute’s CEO Dale Brown (right), in a statement announcing the report, remarked: “You can take out a loan for a car, for education and for a house—but you can’t take out a loan for retirement.”

In pages with plenty of white space, pictures, simple tables and bolded text, the free report illustrates the difference even modest savings efforts can make, especially if begun early in life. For example, a chart titled “When is $10,000 Greater than $30,000?” shows how two 25-year-olds have unexpectedly different outcomes when Jane, who saved just $10,000 but at an early age, ends up with far greater wealth than Lance, who put away three times as  much money but in later years.

Another chart shows how someone who saves $200 a month but increases his savings by a seemingly insignificant sum of $50 (to $250) can add hundreds of thousands of dollars to his retirement savings 45 years down the road.

The report also attempts to ease investor concerns about volatility, stating that retirement investors have mostly recovered from losses occurring in the financial crisis. “In fact, over 90 percent of people with 401(k) retirement accounts have more money in their accounts than they did at the 2007 market top due to increased contributions and market growth, according to the Employment Benefit Research Institute,” the report states.

Possibly of greatest interest to advisors would be some of the resources linked in the report that go beyond the standard retirement calculators on financial services company websites. AXA Equitable, for example, offers virtual retirement savings consultations; ING U.S. has a site that lets individuals compare themselves financially to their peers; LPL offers an advisor toolkit that compares retirement plan fees and design; and Putnam provides a state-by-state tax rate map that could interest advisors with clients considering moving to another state for their retirement.

With a majority of American taxpayers gleefully anticipating refund checks, “Saving Early” may help advisors and their clients consider how best to use the proceeds.


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