7 Ways to Help Baby Boomers Retire
Baby boomers, the ubiquitous post-World War II generation that until recently formed the largest age and cultural cohort in U.S. history, are on the verge of retirement. That cultural shift will present monumental challenges for the American private and public-sector financial system, including credit unions.
Experts predict as many as 8,000 boomers will turn 65 each and every day for the next two decades. Just like every other crossroads the generation has faced, most of them are not willing to follow the norm and acknowledge that they’ve gotten older.
In fact, only one-quarter of boomers plan to sit back in the rocker and watch the world go by. The vast majority are primed for Chapter Two in lives and careers that they’re quite sure they’re not over just yet, which makes retirement economics both dynamic and difficult.
Boomers played a major role in helping grow the U.S. credit union movement to its current 100 million member tally during their lifetimes, but when it comes to retirement services, many are turning their backs on the cooperative institutions they helped build, according to a study by the Filene Research Institute.
Boomers are using their credit unions less in retirement because of the narrow range of retirement services many credit unions offer, according to Baby Boomers & Retirement Planning: Recent Trends and Future Implications for Credit Unions, a study Filene published in January. Many members have retirement assets domiciled elsewhere or cite a lack of convenience as the reason.
But there are distinct roles for credit unions to play, according to Gary Weuve, VP of CUNA Brokerage Services Inc. (CBSI), the investments arm of CUNA Mutual. In fact, various estimates note that the aggregate wealth of boomers falls somewhere between $14 trillion and $41 trillion.
That’s a lot of resources to tap, and Weuve suggested seven strategies for credit unions to follow to get their share of retirement dollars.
1. Offer an investment program with an eye toward retirement accounts. CBSI offers investment officers that work within individual credit unions on a daily basis, becoming familiar to members as part of the credit union’s “staff.” CBSI broker/dealers are trained in the latest investment and market knowledge, yet steeped in the credit union philosophy, allowing for a seamless interaction with members as well as a symbiotic relationship with other departments and services within the credit union.
Other brokers can function in concert with the credit union, even if they are not domiciled within its walls. In either case, a mix of low-risk, low-yield bonds and higher yield stocks can stand beside IRAs (Roth and regular), KOEGHs and other retirement accounts that will give members the mix of assets they need to address short-term needs and long-term security.
2. Brand the program as both an investment and retirement account. Boomers, more than any previous generations, live within the fading bloom of perpetual youth, and they need to become comfortable with the R word. Once the concept of retirement comes into the picture, they will begin to think more clearly and make the right financial decisions for their long-term income and security needs.
3. Establish a financial planning process as well as an investment strategy. Goals without means are like bread without flour, or so the old Spanish proverb goes. Investments are important, but without a distinct plan in place, retiring boomers may not make the right investment decision, or even understand the purpose of what they’re doing.
In terms of credit union member service, nothing could be more important for boomer members right now than helping them plan for their golden years. Couple that with other retirement planning needs, such as evaluating and securing health care coverage or understanding what to expect from Social Security, and the credit union has captured an investment advantage that other institutions likely don’t offer.
4. Market appropriately and zero in on “red zone” retirees. Members aged 55-75 will respond to different marketing messages than Gen X and Millenial members will. They appreciate online ease but may not need a retirement “app.” Know who you’re sending your marketing message to and what you need to say, then get the rest of the credit union on board with their marketing messages as well.
Retirees may never need another mortgage, but they may still borrow for large purchases and vacations, especially if they live long and engage in more active lifestyles. The credit union will want to be ready to meet all of their boomer member needs.
5. Get the word out and educate our retiree members. No matter how sophisticated boomers may be, remember that when it comes to retirement, none of them have ever been there before. Like anyone else, they will need help and guidance especially when it comes to money. And this is an area where the credit union can excel.
Try offering a series of educational workshops, or even a pre-retirement “bootcamp” for younger boomers who are not yet at retirement age. Consider bringing in someone from Social Security who can clear away the thickets and help boomers understand what they can and can’t expect. They will appreciate it and the credit union will be awarded with greater loyalty and more business.
6. Unify the troops, no matter where in the credit union they work. Anyone who touches a member should know what’s afoot when it comes to the credit union retirement planning efforts.
Older members (even boomers) grew up in a people-to-people world, and as tech-savvy as many of them are, there is still a place for human contact. Plus, loan officers, tellers, phone center employees and other member-facing individuals can provide that much more in education and sales to help the member maximize credit union services.
7. Understand the available products and tools and match them to boomers’ needs. It goes without saying that retirement and investment accounts should meet both the short- and long-term needs of the retirees who use them. Funds should be high-yielding, but liquid if necessary, and flexible enough to meet members’ changing needs. Investments are generally made for the long haul, but often with short-term income needs in mind.
Financial tools – generally software and online programs – also should be cultivated to meet a member’s retirement needs. A Social Security payment calculator might provide exceptional value to members considering retirement options.
“The good news about CBSI is that they let us have a wide-open platform with no emphasis on a proprietary product mix,” said Bryan Roberts, VP of wealth management for CBSI who works in $1.4 billion American Heritage Credit Union in Philadelphia. “Most people use cash accounts as well as a mixture of brokerage-managed accounts, annuities with income features, and different life insurance products that will cover long-term care needs. There are plenty of ways to get the job done.”