Why It Matters:
  • You are one of your client’s greatest assets in their financial planning.
  • The retirement savings gap for most Americans is growing.
  • Millions who left the workforce to care for loved ones are returning to work.

Gone are the days of June Cleaver, pension plans, and single income families. Chances are many of your clients don’t even remember such a time. Today’s U.S. families are more often dual-income households, depending on employer contributions to their 401(k)s, and paying someone to look after Junior. With pensions having largely gone the way of the rotary phone, working adults are left to prepare and manage their finances and retirement savings on their own – something they’re not always equipped to do well.

In fact, American’s shortfall in retirement savings increases by $3 trillion each year according to the 2017 “We Will Live to 100 – How Can We Afford It,” report from the World Economic Forum.

While the number of households with two working parents has continued to rise during the past few decades, some women (and men) take a career break to care for their children. On the other end of the spectrum, an increasing number of grown children are stepping away from or modifying their careers to care for aging parents. Many in this group choose to continue their caretaker role indefinitely. Many more, however choose to return to work. Whether caring for a loved one was a decision or necessity, this group can find themselves in a particularly vulnerable situation when it comes to their retirement savings.

The question for financial professionals becomes, how can you help your clients who are returning to work after a career break recover some of their lost retirement savings?

Help clients that take a career break protect retirement savings
  1. Provide them the necessary information about rolling their 401(k) plan to an IRA to continue saving.
  2. Educate them on the differences between Traditional and Roth IRAs.
  3. Outline a savings plan that allows them to continue their individual IRA contributions.
 Fill the retirement savings gap after a career break
  1. Review 401(k) options with a new employer and discuss matching and contributions levels.
  2. Discuss which insurance makes more financial sense now i.e. their employer’s plan or their spouse’s plan?
  3. Explore other company benefits that might affect their overall financial plan.
  4. Don’t forget about catch-up contributions after age 50.

Whether your clients are thinking about going back or have already taken the plunge, you may be in a position to help guide their decisions so they can reap a better reward.

How large is the pool of potential clients?

Millions of Americans are self-employed and/or stay-at-home parents. There’s a chance some of them will look to you for retirement savings guidance. And with life expectancy on the rise, working with a financial professional to plan for a longer-term retirement may make a lot of dollars and sense.

Things to Consider:
  • Be sure to stay up to date on the differences between Traditional and Roth IRAs.
  • According to the U.S. Census Bureau and the U.S. Bureau of Labor Statistics there are potentially 20 million Americans who might not be participating in traditional retirement savings accounts – they still need to save and plan for retirement.
  • On average, Americans are living longer, so being able to afford it is of paramount importance.