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CU System
CMG on new normal CUs must educate on retirement
ROCKPORT, Maine (9/24/12)--Credit unions have the opportunity and obligation to educate members about the "new normal" economy and what it means for their retirement plans, a CUNA Mutual Group speaker last week told attendees of the Maine Credit Union League Management Roundtable. 

"In 1935, life expectancy was age 60. Today, retirement plans are calculated based on a possible life expectancy of age 90 for men and age 92 for women," Niemann explained. "This means people are living much longer on their retirement savings than previous generations and, therefore, need our help to plan."

"Get out in front of members," Niemann advised. "Banks aren't out there educating their customers. You have a tremendous opportunity, seize it."

Credit unions should institute an extensive program of member education to help members understand and navigate the "new normal" economy, he said. This should include educating members about interest rates, investing options, insurance options, future economic trends and providing adequately for health care costs throughout their retirement, Niemann said. Member education  also should include making sure members are fully informed about issues such as Social Security, Medicare, tax planning, estate planning and retirement income planning, he added.

The "new normal" also impacts credit union leaders, Niemann said. Credit unions and their members must assume lower rates of return, lower interest rates and sluggish economic growth for the foreseeable future, which means both credit unions and members need to diversify their sources of income.

"Many credit union members are still too highly leveraged, so they won't be borrowing as much or at all," Niemann said. "This means you need to find other sources of income, such as fee income from investments, to compensate for lower revenue from traditional activities such as lending."
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