Retirement is an inevitability for everyone, but many people are not planning properly for their final years. The desire for short-term gratification sidetracks many individuals who should be thinking about their long-term financial security. Credit unions appeal to many people because they offer a more caring view of money management. Effectively educating members about the risks associated with a poorly planned retirement has the potential to keep members happy with their credit union far into the future.
An unprepared population
A shocking number of people have not created a plan to ensure their financial security after retirement, and this will force them to dramatically change their quality of life. An alarming report released by the Federal Reserve earlier this year revealed 31 percent of U.S. households had no retirement savings or pensions. This becomes even more worrisome with the revelation that 19 percent of those between the ages of 55 and 64 lack any sort of retirement savings.
"A shocking number of people have not created a plan to ensure their financial security after retirement."
To put the problem in even sharper relief, a survey from the Employee Benefit Research Institute found that a full third of U.S. respondents had less than $1000 dollars saved. These people will be in serious financial trouble when they stop working and will be forced to change their lifestyles significantly. It's critical that credit unions provide services that help members avoid this sort of situation.
Altering member behavior
Many elements have led to the epidemic of individuals who are unprepared for retirement, and human psychology is a key part. In a story on CNBC, UCLA professor Shlomo Benartzi reveals that people think about their future self with the same parts of the brain that think about strangers. This disconnect makes it hard for people to adequately plan for the future, as it is mentally as if they are planning to help someone else.
This presents an opportunity for credit unions, which are able to offer members financial planning advice and counseling. In 2013 TIAA-CREF conducted a survey and found 46 percent of Americans felt they needed a trusted source for financial advice. Though peoples' lack of financial preparedness is undoubtedly linked to an inability to visualize the future, it's also rooted in a lack of understanding. In the TIAA-CREF survey, 48 percent of respondents said they didn't know who to trust for financial advice. Credit unions, which are inherently more communal because of their membership structure, offer individuals the opportunity to have a trusted location for financial advice.