Greetings loyal PLANADVISER readers! Coming on the third Friday of the month, this weekend’s mailing is dedicated to the timely and evolving topic of financial wellness. While the topic has been an important focal point for several years now in the retirement plan advisory space, the coronavirus pandemic has cast an entirely new light on the concept of financial wellness. Simply put, the virus has exposed financial fractures and weak points impacting individuals across the income spectrum, putting the onus on advisers to help people create a sense of stability and confidence about their short-term finances.
A new analysis published by EBRI in collaboration with J.P. Morgan suggests a person’s spending habits, rather than their salary, seem to have the biggest influence on whether they are a low saver or an average saver.
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Data collected immediately before the pandemic shows retirement confidence was about as high as it’s ever been; more recent data shows that’s still the case, though shorter term worries are ballooning.
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Though retirement plans can allow individuals to self-certify that they qualify for a penalty-free coronavirus-related distribution, should the IRS discover otherwise during a future audit, a participant can be subject to substantial penalties.
Retirement industry practitioners support the provision of mandatory lifetime income disclosures to plan participants, but they also emphasize the importance of broader income conversations and education.