MADISON, Wis. (8/24/11)--As the stock market wobbled last week and concerns about 401(k) plans grew, a study released Thursday pointed out that middle-income Baby Boomers--those with salaries for $25,000 to $75,000--are poorly prepared for retirement. Credit unions have yet another opportunity to provide solid financial education for a significant segment of their membership. Battered retirement accounts, dropping home values and boomers' lack of personal savings are shattering the retirement confidence of middle-income Baby Boomers, said Middle-Income Boomers, Financial Security and the New Retirement
, a study from Bankers Life and Casualty Co. Center for a Secure Retirement (CSR). The CSR study focused on 500 middle-income Americans between 47 and 65 years old (PRNewswire
Aug. 18). It found nearly 21% of boomers have not seen any rebound in the value of their retirement accounts, 16% report they owe more on their mortgage than their home is worth, and 19% have less than $10,000 in retirement savings. The economic meltdown has forced members of this group to reshape their expectations about retirement and significantly adjust their lives to the financial realities of the new retirement norms. Despite the bleak outlook, boomers are demonstrating a commitment to save for retirement. Nearly one-fifth (18%) say they are saving more money now than before the recession, and more than half (55%) are spending less on discretionary items. Other findings:
* Twenty percent of boomers whose employers contribute to a retirement plan report that their employer reduced matching contributions, while 95% of boomer who participate in these plans increased their personal contribution. * Although 52% have a 401(k) and 48% own an Individual Retirement Account (IRA), 14% have no 401(k), IRA, pension or any other type of retirement account. * Thirty-two percent of boomers surveyed have already paid of their mortgage, but another 48% said they do not expect to have it paid off by the time they retire.
Credit unions can take financial education action on the Baby Boomer retirement front, according to the Credit Union National Association's 2011 Environmental Scan. Some choices include:
* Increase members' financial literacy with a variety of educational approaches: in-person classroom, textbook, online-interactive tutorials, gaming, just in time articles, mobile apps and experiential learning. The learning-by-doing is the most effective. * Make sure your financial literacy program doesn't have any gaps in subject matter. Many credit unions provide budgeting and debt management topics but people in different life stages need different kinds of information. * Tap into the $13 trillion boomer market and help boomers manage their funds. Members who retire are looking to consolidate financial relationship, and credit unions lose members at this point. Expand the credit union's expertise in estate planning, insurance, Medicare and Social Security topics. Make sure they understand the tax implications of prematurely withdrawing retirement funds. * Many adults learn financial education at work. Work with select employee groups in your membership to promote saving for retirement early in members' careers. Tailor your financial educational program by finding out what boomers value most.
Don't forget the rest of the membership. Younger members will grow older and need retirement planning when their turn arrives. But they also have the added burden of paying into a system under the strain of the boomers' retirement years. The earlier credit unions educate young workers about their future prospects, the more likely they will make wise financial choices and perhaps avoid the boomers' experience of not preparing enough for retirement.