How members view their retirement plans in a new economypresents not only an opportunity but an obligation for creditunions to fulfill.

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Hendrix Niemann, managing director, practice and wealthmanagement services for CUNA Brokerage Services Inc., shared thatinsight to attendees at the Maine Credit Union League ManagementRoundtable on Wednesday.

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“Who is going to tell credit union members that retirement haschanged?” Niemann asked. “Credit unions have the responsibility toprovide financial education to their members. This means creditunions have both an opportunity and an obligation to fulfill.”

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Citing recent data from Bank Investment Consultantmagazine, Niemann said 40% of baby boomers had less than $100,000 saved for retirement while 22% have nothing saved for retirement. Almosthalf have never even tried to figure out how much money they willneed to maintain their lifestyle in retirement, he pointed out.

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Because of these gaps, members may really need help from theircredit unions, Niemann said.

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“In 1935, life expectancy was age 60. Today, retirement plansare calculated based on a possible life expectancy of age 90 formen and age 92 for women,” Niemann explained. “This means peopleare living much longer on their retirement savings than previousgenerations and, therefore, need our help to plan.”

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Retiring at age 60 or 62 is probably out of the question formost retirees if they want to maintain their current lifestyle for 25 to 30 years, unless they retiree withsignificant assets, Niemann said. Today, the prudent new normalretirement age is probably 67 or 70, and members usually don'trealize that they may need to keep working longer than they wouldlike to, he added.

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“Get out in front of members.” Niemann advised. “Banks aren'tout there educating their customers. You have a tremendousopportunity, seize it.”

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Member education should include educating members aboutinterest rates, investing options, insurance options, futureeconomic trends and providing adequately for health care coststhroughout their retirement, Niemann suggested.

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It also should include making sure members are fully informedabout issues such as Social Security, Medicare, tax planning,estate planning and retirement income planning.

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Credit union leaders are also impacted by the new normal,Niemann said. Lower rates of return, lower interest rates andsluggish economic growth may be around for the foreseeable future,which means both credit unions and members need to be diversifyingtheir sources of income, he offered.

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“Many credit union members are still too highly leveraged, sothey won't be borrowing as much or at all,” Niemann said. “Thismeans you need to find other sources of income, such as fee incomefrom investments, to compensate for lower revenue from traditionalactivities such as lending.”

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