Financial experts have long predicted that by the time many Americans are ready for Social Security, the funds will be exhausted. That means saving for retirement has never been as important as it is now. Yet, the savings habits of Americans of all ages have never been worse than they are now, which for many may result in the tarnishing of their golden years.

CUNA Mutual can help credit unions reverse that trend with the introduction of the Automatic 401(k) Retirement Program, designed to help credit union employees better prepare for their future. Tom Eckert, CUNA Mutual’s Vice President of Employee Benefit Products, set aside some time to explain why this could be one of the most important programs to come along in years.

 Q: What is the Automatic 401(k) Retirement Program and how does it work?
 
A: With the increasing need for all of us to better manage our own retirement planning, CUNA Mutual’s Automatic 401(k) Retirement Program is an exciting new option that offers credit union employees exactly what its name implies. The program automatically deducts a certain percentage of employees’ salaries or hourly pay, depositing it into approved investment accounts. Employees are less likely to opt out of the program due to its automatic nature. What’s more, the challenge of making the right retirement fund investment decisions has been given to capable investment professionals, reducing risk for contributors.

 
Q: Why is this program so important now?

 A: Data from the Employee Benefit Research Institute has shown us that given current savings rates, by 2030 American retiree income will be $45 billion short of what it needs just to cover basics such as food, housing and medical services. The continued strain on the Social Security System makes it clear that federal funds will not be able to compensate for this shortfall. That means personal savings plans are critical now and will become more so in the near future.

 
Q: This program has been described as “automatic,” and you’ve made clear what that means operationally. Just how important is this feature from a conceptual standpoint?

 A: Past efforts by employers to encourage 401(k) plan participation have largely focused on education, counting on employees’ self-interest to drive their level of plan participation. For a variety of reasons, those efforts have failed. True, some employees are actively engaged in planning their own financial future, but many don’t have the resources, inclination or understanding to set enough money aside. Such hurdles are helping drive the current savings shortfall.

The Automatic 401(k) Retirement Program eliminates many of the variables in plan participation by regulating contributions on behalf of employees and investing in appropriate investments options. The ease of administration sets this program apart for other retirement programs, and it’s another employment benefit that credit unions can offer their staff that’s in keeping with their mission of promoting financial self-sufficiency for consumers.

A: Credit union employees – for that matter, all Americans – have never needed a program like Automatic 401(k) Retirement Program more than they do today.

To find out how the Automatic 401(k) Retirement option can enhance your Employee Benefits Program, please contact your CUNA Mutual Sales Executive at (800) 356-2644.    

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