Key takeaways:
- Investors who start retirement savings as soon as possible enjoy more of the benefits of compound growth.
- Encourage clients to stay invested for the long term to maximize the growth potential of their investments.
- A comprehensive retirement plan including various savings and investment options can help clients invest to and through retirement.
OCTOBER 2, 2O24 – October is National Retirement Security Month, a national effort to encourage American workers to save adequately for a secure retirement. Simply put, National Retirement Security Month is a great opportunity to bring simple and actionable guidance to financial professionals as you help clients and participants improve their retirement outcomes.
It’s an ideal time to focus on the importance of retirement security, not just this month but all year long. In 2024, more Americans are reaching the traditional retirement age of 65 than ever before. And a recent Nationwide Retirement Institute® survey found that many workers are approaching retirement feeling optimistic about their financial future; more than three-quarters of pre-retirees (77%) said they expect to be at least moderately financially comfortable in retirement.
Yet, the same survey found that only 68% of current retirees said they’re actually financially comfortable in retirement. While this may seem like a small difference, it does suggest that about one in ten pre-retirees may find that expectations don’t match reality when it comes to retirement readiness. As professionals in this industry, it’s our job to bridge that gap.
It's important to reinforce the importance of saving early as often as possible. Although many companies promote the importance of retirement planning, for workers the idea of planning for retirement can be overwhelming or too far out to focus on now.
Start saving as soon as possible
This is perhaps the best place to start for clients and participants who haven’t saved anything yet for retirement. The more time people give themselves to save, the more they can realize the benefits of compound growth. Building greater retirement security doesn’t need to be complicated. With clients and plan participants alike, simpler is often better.
Perhaps the most important message to give to clients and participants is to stay invested over the long term. Staying invested is the only way to maximize the power of compounding in a retirement portfolio. Early withdrawals weaken the potential for savings to grow and appreciate in value over time. Your guidance can be valuable to clients and participants to help them make informed decisions rather than emotional reactions.
Sometimes the best way to learn is by example. Sharing success stories can help encourage younger workers to develop good saving habits. For instance, when we surveyed older workers about the financial advice they’d give to their younger selves, most of them said they would start saving early. Starting early can help clients and participants to benefit from the power of compounding. For many people, the last time they likely heard about compounding growth was in middle-school math class.
A holistic plan for retirement
A workplace retirement plan is a common way for workers to save for retirement. Employer-sponsored plans such as 401(k)s make saving simple through automatic payroll contributions and tax-friendly through pre-tax contributions, which means less taxes paid on current income. For most people, the hardest part is getting started – but once they are set up saving, they tend to “set-it and forget-it.”
Many people may be unsure about how much they can afford to contribute toward retirement savings. Our paycheck impact tool is a helpful resource that you can use with clients and participants to help calculate an exact number based off their salary and any employer match options.
For those who are already saving this way, think of opportunities they may have to increase their savings. For example, they should consider saving enough to maximize any matching contributions offered by their employer. IRAs are another savings vehicle that could benefit those without workplace retirement plans as a supplemental savings option. Investments in mutual funds, ETFs or target date funds could be another direction to explore.
With your plan sponsor clients, revisiting the investments in their plan’s menu is another great reason for an annual discussion, ensuring their investment lineup still meets the diverse needs of their participants’ retirement plans.
Your role as a financial professional
One of the most crucial tasks you face as a financial professional is ensuring your clients and participants understand how everyday choices impact their financial futures. To promote retirement preparedness, it’s essential that clients have holistic plans that cover a wide range of retirement challenges and risks. A good place to start is an honest discussion about the realities they can expect in retirement.
For example, one of the biggest challenges your clients will face is making their savings last for as long as they need it. A holistic financial plan for a client would include a solution that helps convert savings to a reliable stream of income they can’t outlive.
You can trust Nationwide for our experience in guiding retirement savers throughout their working lives and into retirement. Every day, we see success stories from workers who were able to plan for their future financial security with annuities, life insurance and employer-sponsored retirement plans. Now, we’re helping retirement savers transition into retirement with confidence with a suite of protected retirement income solutions that fit within their workplace retirement plan.
We also have resources specifically for business or institutional clients, for both public and private sector plan sponsors, so you can help them better support their participants.
Resources for plan sponsors:
As a trusted partner to your business, Nationwide offers tools and resources on Social Security and retirement health care cost planning to help you address your clients' and participants’ needs for savings, income, and protection. Solutions from our full suite of annuities, life insurance, mutual funds, and workplace retirement plans help simplify the complexities of retirement planning so you can better prepare your clients and participants for a more secure financial future.
