Products February 14, 2013

Retirement Expert Wants to Spark Savings Movement

The recently published book, “Transform Tomorrow: Awakening the Super Saver in Pursuit of Retirement Readiness,” focuses on the need for Americans to save more for retirement.
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Author Stig Nybo, retirement industry expert and president of pension sales and distribution for Transamerica Retirement Solutions, told PLANADVISER it is “a book that tries to tap the collective knowledge of our industry.” He added that the basic premise behind the book is trying to change social behavior around savings.   

Nybo advocates a national retirement savings campaign similar to successful Public Service Announcements. “I looked for examples where we achieved significant social change, and one of the best examples I found—and discuss in the book—was the Keep America Beautiful campaign about littering in the U.S.,” he said. People who can remember the 70s know there was a lot of trash on highways and beaches, and a campaign was started featuring a commercial with an American Indian crying as litter was thrown at his feet along a highway.  

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“That is not the experience today; there are trash cans every 100 feet along beaches,” Nybo noted. “What changed to make that happen is we collectively as a society changed the context around littering—i.e., it is wrong—and people’s beliefs changed—i.e., ‘I don’t have to litter; I should use trash containers.'”

Nybo added: “We have to change the context around retirement savings. How easy is it to save versus not save, and what contextual factors within companies will help or lead people to save? We have to change beliefs, getting influencers of our industry thinking about how we create a crying-Indian campaign or Smoky the Bear campaign to change beliefs widespread.” He said a process to affect behavior is laid out in the book.  

 

 

Nybo emphasizes that the retirement industry, policymakers, employers and individuals can work together to create a nation of “Super Savers”—people who save more in order to retire comfortably whenever they choose. “We all need to set a goal of saving at least 10% of current pay every year for retirement. What if we all saved 10%? Think of the impact this would have on the futures of so many people.”   

Nybo said his commitment is shared by Transamerica, and the proceeds of the book will go toward this retirement readiness campaign. “This is purely about establishing awareness and furthering this effort,” he said.

“Transform Tomorrow” is available on Amazon.com.

 

Data & Research February 14, 2013

Gen X and Gen Y Uninformed About Investments

More than half of Generation X and Generation Y consumers admit having little or no knowledge about investments and financial products, according to a LIMRA survey.

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The study found that Gen X and Gen Y consumers who work with financial professionals to make investment decisions are more likely than those who do not to be very knowledgeable about investments and financial products (14% versus 6%). Yet, only one in five work with a financial professional.

Among Gen X and Gen Y consumers with access to a defined contribution (DC) plan through their employer, those who have never made contributions are more likely to feel less knowledgeable about investments and financial products than those currently contributing to their DC plan.  

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On average, Gen X consumers have contributed to their current employer’s DC plan for nine years, accumulating nearly $70,000. The median deferral rate is 6% for all Gen X consumers, but slightly higher for men (7%). Given that Gen X consumers are older than age 30, their deferral rates are typically recommended to be above 10%; however, less than half (43%) are contributing 8% or more. 

On average, Gen Y consumers have contributed to their current employer’s DC plan for four years, accumulating slightly less than $26,000. The median deferral rate for Gen Y consumers is 6%, with one in five Gen Y consumers contributing 3% or less to their current employer’s DC plan.

“There’s a lot of attention on the Baby Boomers(78 million) but there are nearly 116 million Americans ages 20 to 47, and as an industry we need to help these Americans plan and save for retirement,” said Cecilia Shiner, senior analyst, LIMRA Retirement Research. 

The study is based on a survey conducted in May 2012 that polled 5,296 Americans ages 20 to 84. Of the people surveyed, 884 respondents were Gen X and 720 were Gen Y. Additional results were based on LIMRA analysis of the U.S. Census Bureau’s Current Population Survey March 2012 Supplement and the Federal Reserve Board’s 2010 Survey of Consumer Finances.

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