Most people make some type of purchase every day, but how often does anyone consider “buying” retirement? An emphasis on “purchasing” a retirement future is at the crux of the 40-plus-page Savings Fitness: A Guide to Your Money and Your Financial Future booklet by the DOL and Certified Financial Planner Board of Standards Inc. (CRP Board).
The guide features colorful graphics, a straightforward yet encouraging and conversational tone, plus useful worksheets to explain the key steps to obtaining retirement readiness. To meet varying needs, the guide can be printed or downloaded, and interactive worksheets are also available online.
Without being heavy-handed, the guide starts with some basic retirement statistics:
- On average, people can expect to live in retirement anywhere from 15 to 30 years.
- Social Security will not sufficiently support most retirees, as the dollars are just a foundation.
- The responsibility for adequately saving for retirement rests squarely with the individual.
Some of the guide’s primary teaching points include:
Goals and Priorities – While creating a list of short-term and long-term goals is pretty standard, the guide emphasizes that “retirement is a big purchase” and that it should be a top priority. The guide also recommends moving lofty goals to a wish list so people can concentrate on more attainable items.
Financial Documents Checklist and Balance Sheet to Calculate Net Worth – Here the goal is to “create a positive net worth” and grow those dollars each year to pay for emergencies and fund retirement.
Calculating Retirement Savings – Interestingly, the guide states that many people forget to create an actual retirement goal number. “The vast majority of people never take this step, yet it is very difficult to save adequately for retirement if you don’t have a rough idea of how much you need to save every month.”
Cash Flow Spending Plan – Rather than suggesting people create a budget, the guide recommends a spending plan that includes “purchasing” retirement each month.
The booklet also provides easy-to-understand explanations on inflation considerations, annual rate of return on savings investments now and in the future, “good” versus “bad” debt, and debt reduction tactics. There are also briefs on different types of retirement savings vehicles, such as savings accounts (mutual funds, U.S. Treasury bills, certificates of deposit), domestic bonds, domestic stock, and mutual funds.
As a retirement plan provider, you know one of the key steps to saving for the future is getting employees to participate in the plan. On this topic, the guide points out the benefits of defined contribution plan participation and recommends contributing as much as possible (at least enough to maximize employer matching funds). Workers are also encouraged to study investment options and monitor fees, and seek the advice of a financial advisor.
While numerous retirement planning resources exist, the “buy” retirement approach and stepped advice make Savings Fitness: A Guide to Your Money and Your Financial Future booklet worthy of review.
