July 2010

Planning for Retirement


[Excerpted from the 2010 Retirement Confidence Survey, co-sponsored by the Employee Benefit Research Institute and Matthew Greenwald & Associates, Inc.]

The 20th wave of the Retirement Confidence Survey (RCS) finds that Americans’ confidence in their ability to afford a comfortable retirement, which had dropped sharply over the past two years, has stabilized now that the economic volatility of the recession has abated. ...However, fewer workers report that they and/or their spouse have saved for retirement, and an increased percentage of workers report they have virtually no savings and investments.

Many workers continue to be unaware of how much they need to save for retirement.  Less than half of workers (46 percent) report they and/or their spouse have tried to calculate how much money they will need to have saved by the time they retire so that they can live comfortably in retirement. ...Instead of doing a systematic retirement needs calculation, workers often guess at how much they will need to accumulate. ...The propensity to guess or do their own calculation may help to explain why the amounts that workers say they need to accumulate...appear to be rather low.  Twenty-nine percent of workers say they need to save less than $250,000, and another 17 percent mention a goal of $250,000-499,999.  The majority of the workers who had done a calculation either did it themselves or worked with a financial advisor.

Workers who have done a retirement savings needs calculation...tend to have higher savings goals...[and] are more likely...to feel confident that they will be able to accumulate the amount they need for retirement.  Finally, the retirement savings calculation appears to be a particularly effective tool for changing retirement planning behavior. ...Most often, these workers say they started saving or investing more.  Other actions reported include:

If you or someone you know has not done a professional retirement needs calculation, please share this information with them.  A small investment of time and money today may mean the difference between a financially secure future and one that is not.  Silver Oak Advisory Group offers individual retirement needs calculations as well as group educational workshops suitable for employees.  Please contact Jessi Howe, CFP® or Ben Gilbert, CFP®.

Upcoming Workshops

We will also be presenting a new Silver Oak workshop on October 16, 2010 called “How Much Do I Need to Retire?” that will walk participants through a simplified calculation and discussion of the factors and choices that we all need to make in our retirement planning.  For younger people, the “Getting Started with Financial Planning” workshop would be more appropriate.  That one is scheduled for August 14, 2010.

All workshops are held in our office on Saturday mornings from 9:30 am to 11:30 am.  Registration is required due to limited space and building security on the weekends.

All workshops are held in our office from 9:30 am to 11:30 am

We Are Fiduciaries

All of us at Silver Oak Advisory Group believe that something called a “fiduciary standard” is the very best framework for investment professionals to work with clients.  The fiduciary standard is a legal concept, but its core idea is not complicated.  To act as a fiduciary means we professionals have to put aside our own financial interests, and also put aside the business/financial interests of any company we work for, and give recommendations that are solely and completely in the best interests of people like you, our clients and friends.  In other words, our recommendations have to be made with only one concern: is this the best thing I (the professional) can do for you, given what I know about who you are and what you want and need?

So what does it mean NOT to be a fiduciary?  The majority of investment advice is given by brokers, who are employed in the branch offices of large investment firms which often require its employees to recommend certain investments which are most profitable to the company, so long as these are considered to be “suitable.”   These other investment advisers are paid by the company according to how many of these investments they can sell.

While many factors contributed to the recent global economic collapse, the greed perpetrated by brokers and investment bankers working in their own best interests certainly was a significant factor.  Not surprisingly, an outraged public demanded that this must never happen again.  To the real fiduciary practitioners, the solution is obvious: require everybody to act in the best interests of their customers/clients by imposing a fiduciary standard.  No more shady “suitable” investments.

We were encouraged when Congress drafted legislation which, among other things, would bring every provider of financial advice under a fiduciary standard.  Unfortunately, the final version that is being proposed significantly modifies that requirement.  The bill gives the SEC the authority to raise standards for broker dealers who give investment advice after the agency studies the issue.  In addition, it would permit, but not require, the SEC to hold broker dealers to a fiduciary duty similar to the standard to which investment advisers are held. [emphasis added]

The financial planning professionals who are fiduciaries will continue to lobby on your behalf that every provider of financial advice should be under a true fiduciary standard.  If you agree, please call your Senators and Congresspeople and the SEC and add your voice.  Tell them we haven’t forgotten TARP, Bernie Madoff and all the rest of it and want real change and regulation in this area.

Silver Oak Resource List

Many people have told us they appreciated the Resource List we sent out last fall, and have already used some of the providers. Be sure to let us know when you have a good experience with a vendor that we can add to our list so it continues to be a useful document. Contact Linda Scarlett for additions or deletions. Thank you!

Additional Links