Happy Financial Literacy Month!

Each week in April we’ll be sharing tips on our CoPilot Blog to get you thinking in practical terms about reaching your retirement goals. Watch for topics like behavioral finance, “buying” more years of retirement, and important questions you should ask your financial advisor. Engage us, let us know what you think.

Statistic: U.S. household debt at $12.6 Trillion

The news was alarming, in 2016, U.S. household debt rose to $12.6 trillion [1], the biggest jump in a decade. The recent study showed that rising debt comes with a price – less money in your wallet, as well as a burden on your emotional and physical well-being. Over 30 million people (1 in 4) in the workforce are “seriously financially distressed” and living paycheck to paycheck [2].   Household debt affects real people, including your best employees.  When employees are stressed over debt they will bring that negativity to work with them and it soon spills over into workplace culture. [3]  

While employee’s income levels are rising, so is their debt. Chase Bank recently reported there were 16 billion transactions from more than 54 million Chase customers over a two-year period4. That’s a lot of spending, meaning less in the budget for saving.  If we are making more money, the question then becomes why aren’t we saving more – particularly for retirement?  Let’s break it down.

Everyone should put retirement first

What’s the biggest purchase you’ll ever make? If you answered “house,” try again. It’s most likely going to be your retirement. That’s right – retirement is something you buy – like a car or a vacation.  So the question you have to ask yourself is “how important is my ticket to quit working?”   What’s important at all stages of your life is that you continuously plan and save for that “ticket to quit.” Every day that you don’t buy enough retirement, you add retirement debt.

Think in practical terms: Getting retirement right in 6 simple steps

  • Set a vision.  According to a recent report, 81% of Americans say they don’t know how much money they’ll need in retirement [3]. What does retirement look like for you?  Do you want to retire early?  Retire late?  Retire when you reach Social Security full benefits?

  • How long will you be retired?  Your parents and grandparents are the key.  You don’t need to be precise.  Do people in your family tend to live into their 70s, 80s or 90s?  Beyond?  Most people have a pretty good idea of their family history – that’s all you need.

  • So now you know the “what,” it’s time to determine the “how much?” If you’ve decided that you want to retire at 65 and you know your family tends to live to their mid-80s – then you need about 20 years of retirement.  Note:  Life expectancies are generally increasing so if you can, try to pad the number.  Let’s say 25 years of retirement.  Running out of money won’t be fun.

  • Put a number to it.  This is where your retirement service comes in.  It’s possible to calculate the amount of money you need to buy the retirement you want.  Your retirement service can also work out a payment plan.  Pay a lot up front to get a discount or pay a little now and more later – it’s easy.

  • Make the savings process as automatic as possible. Think 401(k). Employees can be automatically enrolled with an option to “opt out.” Saving for retirement becomes that much easier when contributions are made as part of the payroll process – and before taxes. You won’t miss what you didn’t have, right? 

  • Great – now you’re “retirement rich” and “life poor.” Quite the contrary.  This is the Golden Age of Buying.  Never before in the history of “buying stuff” has it been easier to get a lot of stuff for a little money.  Want to go to a sunny beach?  Trivago, Orbitz, Kayak, etc., are all there to give you options at the touch of a button.  Want a new flat screen TV?  Amazon, Target, Best Buy are lining up your options by features and price.

The key is to use those services when YOU want, not when THEY want.  You can be impulsive, adventuresome, or simple – the solutions for living life today on your terms are all around you. Better yet, think about what you’ll be able to do in retirement using those same services!

How many years of retirement will you be able to afford?

We’ve created PAi’s CoPilot 401(k) service as tool to move you from visualizing your retirement to helping you get there. We’ve ditched the complex charts and calculations, and translated your dollars into the only thing that matters – how many years you can afford to be retired. We won’t tell you how to buy, others will. You’ll just know if you’re on track or not; no judgments.

Let’s start with a conversation, then let us do the rest of the work for you. Contact us online or give us a call to get your plan started: 800.236.7400.

Michael Kiley, Founder and CEO



[1] www.zerohedge.com retrieved from: http://www.zerohedge.com/news/2017-02-16/us-household-debt-rose-126-trillion-2016-biggest-jump-decade

[2] www.pfeef.org (2006) Retrieved from https://pfeef.org/wp-content/uploads/2016/09/Financial-Distress-ACCI_2006.pdf

[3] www.NAPA-net.org (2/17/17) Retrieved from http://www.napa-net.org/news/managing-a-practice/industry-trends-and-research/americans-still-clueless-about-retirement-but-know-theyre-not-doing-enough/

[4] www.pymsts.com (August 22, 2016). Baby Boomers slowing down spending as they age. Retrieved from http://www.pymnts.com/consumer-insights/2016/baby-boomers-slowdown-spending/