With turmoil all over the world (including our wallets), the idea of financial resilience is particularly important today. But between inflation and stock market volatility, retirement may seem even further away for many of us. In fact, half of worried retirees in a Survey 2022 from the Employee Benefits Research Institute cited inflation as the main reason they felt less confident about living comfortably in retirement after the pandemic.
Even under ideal conditions, planning for retirement can be complex – that’s why it’s strategically important to work with your 401(k) plan financial advisor on how to communicate and help plan members through difficult conditions. tough economic times like the ones we face today.
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After all, since most Americans rely on the workplace for their retirement savings, employers are becoming a critical resource in helping people navigate financial turmoil. So how can you leverage your relationship with a 401(k) plan financial advisor to help your workplace retirement participants stay committed to their plans even when they have concerns about the inflation and volatility?
Manage the ups and downs
When it comes to building a house, while you need detailed plans for the rooms, roof, walls, electrical and plumbing, construction really begins with laying a foundation. Likewise, we all need a strong financial foundation to achieve any of our financial goals, especially retirement. It may be difficult for some of your employees to continue building an adequate nest egg during times of volatility and inflation, but your advisor can do a lot to help you.
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Talk to your retirement plan advisor about how to educate 401(k) participants on financial essentials and connect them to additional resources. Learn about ways to help them find an achievable balance between their short-term needs and their long-term retirement goals.
Here are five topics to discuss with your advisor:
1. Link pension plans to more holistic choices. Retirement does not happen in a vacuum. All the pieces of our financial lives need to work together, including budgeting, debt, emergency savings, understanding the basics of investing, asset allocation and rebalancing, and even earning money. shares. Your 401(k) plan financial advisor is an important resource for learning how to help participants take advantage of 360-degree planning resources like financial coaching through your wellness offering. Lean on them for tips on financial education and strategies to connect your retirement participants to additional benefits like financial wellness that complement a competitive retirement program. For example, access to budgeting tools or a financial coach can be a lifesaver when trying to stretch every dollar in volatile conditions.
2. Put the workplace to work. In our recent study on workplace retirement, 87% of plan sponsors said that when a financial advisor is offered with the workplace retirement plan, the company as a whole achieves better results, including higher employee participation (86%) and more eligible employees staying on track for retirement, with higher retirement savings. We see first-hand how financial advisors play a central and essential role in helping employees pursue their long-term investment and retirement goals, helping employers attract and retain top talent. Access to financial advice and investment management through benefits such as your 401(k) can help your employees better understand their various investment choices and planning scenarios for greater peace of mind. spirit and a longer-term perspective.
3. Light up outside resources. Your financial advisor for your 401(k) plan can also explain how to help employees tap into key external resources such as Medicare, Social Security, and long-term care insurance in their retirement planning. – while remaining realistic about their overall savings needs. . For example, the senior league found that social security benefits have lost 40% of their purchasing power since 2000 due to inflation. It is therefore important that your employees understand how far they can expect these resources to stretch during their retirement years. And if your benefits don’t include any life or long-term care insurance, ask your advisor about the pros and cons of possible updates to your program.
4. Demystify your retirement plan. During market sell-offs, a portfolio’s asset allocation often shifts as stocks sell off and bonds rally, and investors are sometimes shocked by the swings. Your 401(k) financial advisor can serve as a go-to to answer questions from your retirement plan members about how market conditions and inflation are affecting their savings, investments available through your retirement and how to structure and manage their portfolio. . No matter what they’ve accumulated over their career, they’ll need help interpreting their retirement assets amid market swings and inflation. On-demand seminars, retirement newsletters and fact sheets, employee resource group events, guest speakers, enrollment drives – all of which can help your employees better engage with and understand their retirement plans. . But a 401(k) plan financial advisor can provide more personalized training and support.
5. Develop the team. Estate planning, taxes and overall financial wellness are often overlooked in retirement conversations, so ask your advisor how to position additional education and financial wellness resources around these topics to help your employees to protect their assets, prepare for the unexpected and reduce unnecessary expenses. administrative costs, taxes and future family disputes. For example, it can be helpful to encourage employees to connect with an accountant to help them plan and strategize from a tax perspective.
keep a clear eye
Your employees will appreciate the support of their workplace as they juggle their current financial needs and their long-term retirement planning in the current economic climate. While it’s important to offer a competitive 401(k) or retirement plan, it’s also essential to back your plan with relevant financial education, advice, and additional benefits that can help empower your employees, no matter what financial conditions they face.
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Uncontrollable twists and turns in the economy will always play a role in our lives – and our finances. Hard times come and go. Working with a 401(k) plan financial advisor can help participants mitigate these difficulties and maximize recovery.