Sunday, October 19, 2008

No Time Like the Present

My September 30 statement arrived on Friday. No, I didn’t look at it.

My wife opened hers (she’s braver than I). I heard her rip the envelope open, and I’m pretty sure I held my breath (doubtless listening for the thud of a body in the next room). But then, much to my surprise, she commented that it wasn’t as bad as she thought it might be. For a brief second optimism flittered—I started to get up to check it out.

Then, I remembered the date of the statement. That’s right, September 30, 2008. Or as I think of them now, the “good old days.”

We’ve all been dreading the arrival of those statements for what seems an eternity now. Yes, the headlines have been screaming about the stock market losses, and the 24-hour news cycle has been feasting on one interminable voice after another offering their perspectives on what it means, and when—or if—it will end. Participants—even those who have been trying not to think about it—surely have to be prepared for the worst.

And therein lies a possible ray of hope, IMHO. As disappointing as many of those September 30 balances will be, they are almost certainly better than many will be expecting (not all, of course—and some are surely monitoring the daily impact on their accounts via the Internet). And, while I would never advocate misleading participants about the painful realities of market cycles, it seems to me that, between now and the next statement cycle, there is a window of opportunity to recapture the attention of participants who might otherwise be inattentive to the current state of their retirement readiness.

There’s no time like the present to remind participants of:

• the importance of keeping a regular eye on their asset allocation—and/or the tools that can help them do so; automatic rebalancing is now a common feature in many recordkeeping platforms, not to mention managed accounts or asset allocation solutions, such as target-date funds;

• the need to refine those allocations as they approach retirement, to move money toward less volatile options that can provide the steady source of income we’re all looking for in retirement;

• the importance of their retirement savings account as a part of broader approach to retirement planning;

• the value and role of things like defined benefit pensions and retiree health care, for those who have access to those resources (dare one hope for a resurgence in participant interest?);

• the importance of remembering longer-term trends in the markets; for instance, what happened between October 19, 1987, and the end of that year. Or, for those too young to appreciate that reference, the recovery after the tech bubble “burst”;

• the fact that regular investment through payroll deduction means that they invest at different times and different prices—neither the peak, nor the trough;

• the “return” on their account that comes from their employer’s match;

• the importance of saving the right amount versus picking the “right” investments.


Now, these are extraordinary times, by any measure. But there’s no time like the present, IMHO, to remember—and remind participants—of their future – and the importance not only of saving, but of saving the right way.

- Nevin E. Adams, JD

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