Running out of money in retirement is a rational fear, and many of today’s workers are feeling it, especially post-COVID. According to Gallup, 63% of American adults surveyed in April 2022 were “very worried” or “moderately worried” about having ‘enough’ to retire when or how they would like.
The reality is that most Americans are behind on saving for retirement, and there are two main factors leading to the savings shortfall in America—not saving enough or not saving at all. According to a recent PWC Study, one in four workers surveyed had no savings at all, and an IRI (Insured Retirement Institute) survey found that 51% of the workers polled had under $50,000 saved. According to that same IRI survey, only 20% of workers had over $500,000 saved and only 8% had over $1 million saved.
What can business owners do to help reverse this retirement savings crisis?
The answer is quite simple—educate and empower. Many employees worry that they don’t have enough saved because they aren’t sure what they’ll need to retire successfully. They might not have the education to best optimize their resources to generate a predictable income or how long their savings will last against inflation and market risk.
While there are many options out there for business owners to choose from when it comes to educating employees on their finances, none make it as simple as The Society for Financial Awareness (SOFA). SOFA is a nonprofit whose mission is to provide financial education across America, one community at a time. It is comprised of professionals throughout the nation who put on informative presentations to individuals, companies, and organizations. These events educate and help attendees understand and address a variety of financial topics and concerns—including planning for their own retirement.
While there are chapters of SOFA all around the country, two of our own team members have been leading the Mid-Atlantic Chapter for the last two years, Nick Ibello and Brian McKinney.
Unfortunately, there aren’t enough companies that make it a priority to provide financial resources and services to their employees. And those that do have third-party providers coming in for financial education presentations are not doing them frequently enough. Another issue is that many of these third-party providers don’t make the concepts of saving and preparing for retirement easy to understand or to implement for those in attendance.
Working with SOFA is different. The relationship begins with the employer-sponsored presentations, but it doesn’t end there. SOFA professionals offer individualized, no-obligation reviews to all interested attendees, as well. Employers are typically so pleased with the results of the presentation that they invite SOFA back to build long-lasting relationships—the kind that empower attendees to gain and/or maintain control of their finances over time. And all of that starts with our modern view on retirement.
How to view modern retirement
Modern retirement should be viewed as a problem of purchasing power rather than as a problem of principal. That is, rather than asking, “Have I saved enough?”, we should be asking, “Will my money last through my retirement years?” That’s because not everyone’s financial situation will require a minimum amount invested to be successful, even though we know that psychologically many of us feel the need to anchor toward a certain threshold of “money in the bank.”
Of course, you will need to put careful thought into when you are financially ready to leave the workforce and that steady, predictable, employer paycheck, but it’s important to remember that retirement isn’t always about having a certain amount saved up. It’s about ensuring you have clarity on your projected expense profile in retirement and the income sources that you will have to meet those expenditures.
Understanding all the moving pieces of a successful retirement plan can be tricky (and let’s face it, overwhelming). Working with a trusted financial advisor can help you gain the insight needed to understand where you stand in relationship to your goals and the peace of mind of having a clear roadmap of how you are going to get there.