In this our second in a series of articles about helping clients in the Accumulation Phase of Retirement Planning, we address the second root cause of inadequate retirement saving, which is the difficulty of balancing current family needs with future retirement needs. People want to set aside more money for retirement, but they are spending all of their income on current family “needs” and do not believe they can allocate more funds to retirement savings.

To be sure, there are situations (e.g., severe health care costs) that prohibit saving for retirement. However, the Employee Benefit Retirement Institute’s “Retirement Confidence Survey”, conducted in 1999, revealed that 69% of workers surveyed who are already saving for retirement reported that it was possible for them to save an additional $20 per week.  That incremental savings amount, seemingly modest, at 10% growth for 35 years will result in an additional $332,845 in capital at retirement. Clearly, most people can save more if they are sufficiently motivated to do so.

Motivating Clients to Make Savings a Priority in their Family Budget

To help clients and prospects with this issue, you must address their emotions. The following questions can help clients gain greater awareness of family needs today versus retirement needs later.

  • “How has your advisor helped you to balance current financial needs with the need to set aside money for the future?”
  • “How did your prior advisor work with you to show that even a modest increase in current savings can have enormous impact upon your future retirement?”
  • How has your advisor worked with you to balance your retirement savings need with other financial obligations?”
  • “Has your advisor reviewed your accessibility to retirement plan assets in case of emergencies?”

The Solution to Balancing Saving and Current Family Needs

The following key action points provide guidance to help a client or prospect begin to address insufficient savings for retirement:

  1. Be sure to listen for and address the emotional issues as well as the factual issues that affect your client’s behavior.
  2. Illuminate the consequences of failing to save.
  3. Diligently explore potential retirement savings/income resources that clients often overlook.
  4. Even if the client cannot achieve the entire savings goal, it is important to help the client take the step to increase the savings rate, no matter how small the increment. 
  5. Consider helping the client get specialized assistance for budgeting and/or controlling expenses.
  6. You can help relieve a client’s anxiety about lacking access to retirement savings by educating them on in-service withdrawal options and their ramifications. 

“For those who wish to learn more about critical issues in retirement planning, check out Greene Consulting’s Retirement Planning Program.” Click to learn more.

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