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CUs Need to Help Members Figure Out a Realistic Retirement Plan, CBSI Wealth Management Director Says
Wednesday, April 16, 2014 6:50 AM

The collision of economics, demographics, and longevity is raising credit union member concerns on income sustainability during retirement, according to Hendrix Niemann, managing director of wealth management for CUNA Brokerage Services, Inc. (CBSI).

“Credit unions are on the verge of facing major membership changes,” says Niemann. “Millennials are set to emerge as credit unions’ dominant demographic by 2025, and Baby Boomers are starting to enter retirement, while both groups face a challenging recovery.”

In the past 800 years, Niemann says there are no documented examples of an economy that had to emerge from a financial crisis while simultaneously absorbing the effects of an aging population.

Today, the average 65-year-old male has a 50 percent probability of living to be 85 years old with the average 65-year-old female living to be 87, which makes the average length of retirement at least 21 years. And, if the person is part of a couple, there is a 50 percent probability one of them will live to be 91, which makes the average length of retirement jump to 26 years.

“Many people don’t realize it, but we’ve entered a new normal for retirement,” said Niemann. “The golden age of retirement is not coming back. Many credit union members think it will, but it’s not coming back.”

The Baby Boomers are the largest generation in U.S. history ever to retire – and the vast majority of them have not saved enough for retirement. As they realize this, many seniors are postponing retirement or re-entering the workforce.

“The Boomers are relying on social safety net programs, such as Social Security and Medicare, that were never designed or intended for a large contingent of beneficiaries who will probably live 25 or 30 years – or more - in retirement,” said Niemann. “Those programs, under their current models, will be unable to pay the benefits seniors believe they are entitled to,” he added.

Today, there are 30 million fewer people in Generation X than in the Baby Boomer generation, which means 30 million fewer people paying into the retirement system for this massive retiring population.

“The Millennial generation (Gen Y) is as big as the Baby Boomer generation, but they are far behind their Boomer parents in launching their careers, largely because of a massive and still-growing student debt burden, which now tops $1 trillion,” adds Niemann. “Ironically, their ability to pay into the system is also being hampered by their own parents, who are blocking their children’s path up the economic-ladder because of their own need to continue working.”

The effects of these demographic trends are exacerbated by the fundamental changes to the U.S. economy that have come about since the 2008 financial crisis and the start of the ‘new normal’ economy we’re currently in, he added.

“The bottom line is this – what retirement looks like, or will look like, for those in retirement or about to retire may be a lot different than they thought it would be,” said Niemann. “There’s a very real and valid fear among retirees that they will outlive their assets or run out of money because their nest egg is simply not large enough, particularly because they have not saved for out-of-pocket health care costs in retirement that are not covered by Medicare.”

“Members need credit unions more today than ever before, but they just don’t know it, yet,” Niemann continues. “Most Baby Boomers don’t have a retirement income plan or a plan for funding long-term care. That’s where the credit union fits in. Credit unions have a major role to play in educating their members about these issues and helping them to navigate the new normal environment.”

Credit unions, he says, shouldn’t wait for members to come to them. Credit unions need to reach out to them.

“Ask members to visualize their future, and then help them figure out a realistic retirement plan,” said Niemann. “Credit unions have the knowledge, expertise, and resources to help members navigate these changes, but they can’t delay. They must start today.”


Helpful Resources: Cornerstone Credit Union League’s IRA Basics and IRA Advanced seminars May 13-14 in Dallas. Credit unions can attend one or both seminars, and online registration is now available. Well known trainer Deborah Crawford is presenting both seminars.

At the IRA Basics seminar, Crawford will focus on IRA Basics. This seminar is essential for IRA administrators new to IRAs, as well as those looking to gain additional knowledge about IRAs. In the IRA Advanced seminar, Crawford will focus on compliance, auditing and reporting. She will cover everything credit union professionals need to know about IRAs, including legislative updates.

For more information, including registration, please visit the Education section of Cornerstone’s website. If you have any questions, please contact Training & Events, at (469) 385-6630 or (800) 442-5762, ext. 6630

Educational grants are available through the Cornerstone Credit Union Foundation. To learn more, please visit