When it comes to retirement, we as advisers tend to focus too much on investment analytics, expense ratios and other technical complexities. Yet most people who are behind the retirement curve just want to know that they can catch up by taking simple, bite-sized steps.
Take a recent client of mine who we’ll call “Steve.” A well-educated, 50 year-old, who never got married, he earned enough to enjoy a good life. The only problem was, he only saved about $90,000 toward his retirement. He knew Social Security wouldn’t cut it, but he always thought next year would be a better time to put more into his 401k. As an adviser, would you help Steve?
This is what I did: Working through his employer, I conducted an enrollment meeting to educate Steve, along with the entire workforce, about retirement planning. The meeting focused on the “three legged stool” for retirement, which has become a four legged stool for a great number of today’s workers:
1. Social Security
2. Personal savings
3. Pensions, 401k, 403b, IRA’s and other tax qualified retirement plans
4. Continuing to work past retirement age
The goal of meetings like this should be to ensure that everyone present can get by with a three- and not a four-legged stool. The big takeaways should be the need to:
· Defer as much as possible towards retirement now
· Increase that amount by one percent of pay per year
· Get payroll deferrals of 10 percent per year
Every company with a retirement plan has a “Steve” who has waited too long to prepare for retirement. Conducting enrollment meetings is an effective way to help them and their fellow employees understand the importance of retirement planning and kicking out the fourth leg of the stool.
