Tag: CFP

Financial Planning is the New Employee Benefit

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Some of the most progressive companies are introducing a new employee benefit: company-paid financial guidance.

Concerned about their employees’ retirement funds, and acknowledging the increasing scarcity of skilled employees, companies are looking for a benefit that is relatively inexpensive while making a big difference in employee satisfaction.

Financial insecurity troubles most people, from the entry-level employee to the highly compensated professional. Half of U.S. households are at risk of being unable to maintain their standard of living in retirement, according to one study. For most people, financial stress is a distraction from work and leads to lower productivity.

Money is the single largest source of stress for employees, ahead of work, relationships or health.
Employers are concerned about the impact employees’ financial problems are creating problems at work. Here’s what employers say they are most concerned about:
• Lack of retirement readiness 16%
• Paying down debt 15%
• Lack of emergency savings 13%
• Other 3%

Without professional guidance, most people take a seat-of-the pants approach. But that leaves them and their families wondering how they will survive the decades that they will spend after leaving the work force.

Many companies offer a retirement program, like a 401k, but are ill-equipped to do more than provide a menu of investment choices. To fill the information gap, more companies are offering financial-wellness programs. Others are considering such a move.

A program offered by Korving & Co. is a series of programs, provided by a CFP® (Certified Financial Planner™) professional. These are designed to educate participants about debt, investing, and retirement income planning.

Providing employees with professional education about these issues, on company time, in a relaxed setting is an economical way for companies to help their employees reduce stress. It also creates a great deal of good will and loyalty on the part of employees.

What is the right amount to save when aiming for a certain retirement goal?

Question from middle-aged worker to Investopedia:

I am 58 years old earning $100,000 per year and have investments in multiple retirement accounts totaling $686,250. I’m retiring at the age of 65. I am currently investing $16,000 per year in my accounts. I project to have $848,819 in my retirement accounts at the age of 65. I will be collecting $2,200 in Social Security when I retire. I also do not own my home due to my divorce. How much money will I need to hit my projection? Should I be saving more?

My answer:

I believe that you may be asking the wrong question. For most people, a retirement goal is the ability to live in a certain lifestyle. To afford a nice place to live, travel; buy a new car from time to time, etc. By viewing retirement goals from that perspective you can “back into” the amount of money you need to have at retirement.
To do that correctly you need a retirement plan that takes all those factors into consideration. At age 65 you probably have 20 to 30 years of retirement ahead of you. During that time inflation will affect the amount of income it takes to maintain your lifestyle. You will also have to estimate the return on your investment assets. As you can see, there are lots of moving parts in your decision making process. You need the guidance of an experienced financial planner who has access to a sophisticated financial planning program. Check out his or her credentials and ask if, at the end of the process, you will get just a written plan or have access to the program so that you can play “what if” and see if there are any hidden surprises in your future.

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