MADISON, Wis. (4/22/14)--It's no secret that younger generations will likely have more trouble adequately preparing themselves financially for retirement. Prospects for a sufficient pool of Social Security dollars, given recent trends in demographics, seem bleak.
Spurred by the idea that credit unions must help their members tackle even the most difficult financial challenges, such as these, the Filene Research Institute recently looked into how younger generations are planning for their respective financial futures.
What researchers found was that fewer and fewer young people are taking steps to save for retirement, but that credit unions can begin reversing this trend by promoting retirement planning education programs aimed specifically at younger generations.
"This is not necessarily a marketing or sales campaign," researchers wrote in the paper, "but a program that will engage the next generation of retirees at a younger age."
The paper highlights the types of retirement products available both in the U.S. and the U.K.; whether and how young people are using those products; and ways credit unions can get involved in the retirement planning process.
Researchers interviewed several people under age 35 for the paper and found, rather uniformly, that these individuals aren't taking advantage of employer or personal pension plans largely because they don't know how they work.
Credit unions could step in here, researchers said, because many institutions already build financial education into their current operations.
The paper also argues that collective pensions, a product that primarily relies on cooperation between participants, would fit perfectly within the credit union's financial cooperative philosophy.
"As members from multiple credit unions save in this cooperative retirement fund, their collective bargaining power allows for further investment, lower risk, and average higher returns," the paper said.
The popularity of such a program could create the need for a retirement credit union service organization as well, researchers said.