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The holiday season ushers in the time of year during which new year’s resolutions become a prime topic of conversation and that always include resolving to improve on the financial front.
For some people, it’s resolving to pare debt and/or dial back on discretionary spending. For others, financial resolutions mean allocating more cash to investments and on a related note, many folks are aiming to bolster retirement savings when the new year arrives. That’s a good priority to have because data confirm many Americans across a variety of age groups are trailing in the retirement department.
Heading into the new year with resolve to improve retirement savings is positive for another reason: it’s a goal advisors can help clients achieve. It’s also a noble endeavor because other data points not taking action on retirement planning and savings sooner is a major source of financial regret for many clients.
By prioritizing working with an advisor now, prospective clients can head into 2025 knowing that an improved retirement plan is on the agenda and they can break free from financial regret.
Retirement Regret Is Acute
Nationwide’s 2024 Protected Retirement Survey confirms the extent to which many investors and workers feel regret when it comes to not being more proactive about saving for retirement when they were younger and advisors should acknowledge those expressions.
“According to the survey, a striking 82% of employees over the age of 45 wish they had sought advice or guidance on retirement savings when they were younger,” notes Nationwide. “The same number wish they understood the importance of compounding interest sooner, regret not taking retirement saving more seriously during their younger years, and wish they had focused more on income protection strategies at an earlier age.”
Advisors are also part psychologist. When it comes to financial goal setting, New Year’s resolutions and otherwise, clients, particularly those in younger demographics, demand more when it comes to budgeting and help with spending.
In fact, broader budgeting and spending plans should be viewed through the lens of value-add service, potentially with revenue possibilities. Bottom line: Data confirm clients want more than being told to rein in their Starbucks habit or to stop eating lunch out. Add to that, one way for clients to avoid regret is to take action now and advisors can help with that.
“More than three-quarters (76%) of workers aged 45+ wish they had started saving earlier. Whether you’re just beginning or already contributing to a retirement plan, it’s never too late to start or increase your savings. Even small steps, like contributing monthly to a 401(k) or increasing your current contribution by 1 – 2%, can lead to significant growth over time thanks to the power of compounding interest,” adds Nationwide.
More Regret-Avoidance Tips
There are other steps that can be taken today to avoid financial regret later in life. For example, advisors should encourage clients to maximize the employer match in workplace retirement plans and investigate any other financially related perks the employer offers as part of a broader benefits package.
Next up is building an emergency savings plan – something that many clients have procrastinated on for far too long. On a related note, the time is now to tackle debt and do so in strategic fashion. Fortunately, advisors can construct the right strategy for clients.
“Paying down debt is essential for financial health, but it shouldn’t come at the expense of saving for retirement. Prioritize eliminating high-interest debt, like credit cards, while still contributing to your retirement plan. Striking this balance can help grow your savings through compounding interest while easing the burden of high-interest debt,” concludes Nationwide.
Related: Advisors, Here’s Why Gen X Should Be Your Next Big Focus