Addressing the Affordability of Retirement Savings
Generally, the reason that employees fail to save for retirement is not because they don’t know the benefits of retirement savings. And, for the most part, it is not because they don’t believe in saving for retirement (although there are some with this mindset).
No, the primary reason that people do not elect to save for retirement is that they believe that they cannot afford to do so. And, for some people who are so financially destitute that they need to focus on other fundamental financial issues before they can even begin to think about saving for retirement, this is indeed the case.
However, for the vast majority of employees who believe that they cannot save for retirement, the reality is that they do indeed have the capacity to do so. If they actually paid attention to what they spend and worked on a budget, they would discover that they are wasting money – and tons of it!
And it is not even about spending money on things that they shouldn’t (although there is a lot of that going on); people are giving money away simply by paying full price for items they want or need (nearly everything can be purchased rather easily at a discount) and having so much clutter in their homes that they buy duplicate groceries and/or other items! And they do these things over - and over - and over again, hemorrhaging piles of money in the process.
How do I know all this? Well, let’s just say I have been there and done that! By paying better attention, I have easily saved thousands of dollars a year, which I have redirected to retirement and other savings. Any dollar not wasted can be a dollar saved - which, over time, will have a dramatic financial impact!
So, the next time you are thinking about how to communicate with the employees who still refuse to save in your retirement plan, try addressing the root cause of the affordability issue. Show them how they can take simple steps to improve their financial picture in order to afford to save for retirement!
Note: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice. Opinions expressed are those of the author, and do not necessarily represent the opinions of Cammack Retirement Group.
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