Financial Planning is the New Retirement Planning
Have you ever been financially stressed in your lifetime?
If you answered yes, you know stress does not leave your mind for even one second of the day. It stays there and pulls your thoughts in many directions when you need to focus on other important parts of your life such as your family or job.
The world of employer sponsored retirement planning (i.e., 401(k)) has taken a shift towards addressing financial stress. No longer are retirement plans solely based on how much you need to save towards retirement but so many additional resources to benefit employees.
Consider the software used by a 401(k) provider which asks you how you want to live in retirement and calculates the amount you need to start saving to reach your goals.
What if the calculation is out of reach for your budget?
How much would you end up putting into your 401(k)?
This issue has been addressed in recent years. A common response is: “Well, I can’t put the calculated 15% of my pay into the 401(k) even though the system is recommending that amount. I guess I’m not going to contribute anything right now because these numbers just don’t make sense to me.”
Unfortunately, I have seen this situation too many times. The stress of it all leaves individuals feeling frustrated, overwhelmed, and uncertain. The solution to this psychological game of chess is simply focusing on your financial wellness, rather than retirement planning. By focusing on short-term budgeting needs and addressing those concerns today, we can create a plan for long term success leading into retirement. However, the longer we wait to address current budget challenges, the longer it will take to put an action plan in place for the future.
How have 401(k) providers changed to help this ongoing concern?
Many 401(k) providers have implemented programs focused on financial wellness to help educate and lower the stress on employees. Not only that, but most providers have also taken it to another level and added actionable items to the plan to keep employees on track to reach their goals.
If someone were to recommend you start an emergency savings account, it may seem completely logical and necessary. As time passes between your conversation and work or other life events this type of goal is easily put on the back burner to be addressed when life calms down. Today most providers have an avenue for employees to act on the spot in effort to prepare for situations requiring emergency savings. Emergency savings is one example of how to implement financial wellness. I chose to use this as an example because the pandemic we all experienced this past year lead many families and individuals to require the use of emergency funds.
Another topic falling in line with these actions include resources for student loan refinancing or consolidation. Providers have created links to institutions to allow employees the opportunity to free up money through refinancing higher rate student loans or shorten their duration. The irony in current employer sponsored retirement plan offerings is the focus shifting from retirement planning to taking care of today’s dollars.
How can employers support this change to benefit both their employees and the business?
Many times, this topic is one not thought about from an employer standpoint. Many employees in today’s workforce receive 100% of their financial structure from their employers who often trust they are providing employees the best assistance possible. However, if employer sponsored benefits focused on financial wellness are brought to the forefront of benefit offerings it can increase success for both the company and employee.
Reconsider my original question - have you ever been financially stressed in your lifetime? The truth is we have all been financially stressed at one point or another in our lives, but we can minimize the stress through financial wellness and helping employees act. When employees do not have the nagging thought of stress controlling their minds they can focus on work without those added distractions.
For all individuals in the 401(k) plans, we work with, we provide the full force of our office to address any concerns and identify any opportunities. From financial wellness, financial planning, and investment planning, we focus on each key area to ensure individuals are making the right decisions with their money.
“A goal without a plan is just a wish. ”
*Antoine de Saint-Exupéry
Reach out to discuss your retirement plan services today and discover the NMII difference.
Wealth Advisor | Retirement Plan Specialist
Nelson Murphy Insurance & Investments
Phone: 402-506-6943 Fax: 402-763-8990
11620 Arbor Street, Suite 201, Omaha NE 68144