Are your members budgeting for retirement? If not, one of your products could help. Your membership forms package facilitates sign-up for checking and savings accounts, but after that, what are they doing? A little planning and strategy now, can yield huge dividends later. Here are some great things to keep in mind as you talk to your members about retirement planning.
Know your expenses. In order to know how much they will need for retirement, your members need to know how much it costs them to live. There are a few simple things they can do.
Bank Statements. Gathering up the last six month’s bank statements will give them an idea of where they spend their money. They may not even need to go through bank statements if they use budgeting software, or if your credit union offers a categorical breakdown of expenses. They can tweak categories from there. Also, it is a great opportunity for your credit union to show off your online banking benefits.
Income Tax Statement. Looking over the previous year’s income tax statement will give members an idea of how much is required for them to live on. Of course this number will increase, but we will address that in a moment. Knowing a ballpark figure will allow them to plan adequately.
This relationship is an important one. Inflation is a part of life. The dollar loses strength and value every year. Member investments like 401ks, IRAs, CDs, and other investments should outpace inflation. If not, encourage members to speak with a financial advisor to switch up their investments. They will appreciate this conversation in the future.
Spending. This is the number one danger to any retirement event. Overspending will deplete capital and generate smaller returns. The end result could be that your member needs to find a part-time job, or rely on help from friends and family members. This is why the first two items are so important. Knowing how much your member needs to live on will allow him to set a monthly budget.
First Half vs. Second Half. Talk with your members about how they will spend their retirement in terms of time. Most often, the first half is spent traveling and enjoying things they always wanted to. The second half is usually dominated by health expenditures. Planning for this will help them live comfortably throughout their golden years.
These are retirement budget basics. Knowing how much is required to live, and how they will most likely spend their money will help them adequately prepare. Most often, financial advisors say a retirement budget will be 70%-80% of pre-retirement gross income. However, using the planning tips above, your members may find they can live on less, or may require more. This is why it is a good idea to start a conversation with them when they sign up. There is no better opportunity to get to know your members than during the application process. The conversation is not hard, and our membership forms and disclosures make the process easy! If we can be of any assistance, or for membership document questions, give us a call at (800) 537-9598!