Financial advisors are at a huge advantage. You have knowledge about an industry that is foreign to many Americans, and answers that are frequently searched for online. Use that to your advantage through well-written blog content. Provide commentary about industry trends, new research, case studies, investment news or even “what not to do” advice. Your blog can provide the perfect opportunity to become a trusted resource for existing clients, as well as where potential clients will know they can turn for well-balanced advice. What should you blog about? Blogging for financial advisors is about providing content that will grab the attention of your readers or followers on your social media account. Here’s an example of how to turn recent research into valuable content.
Report Finds Americans are Missing Out on Billions in Retirement Contributions
There is good news and bad news on the 401(k) front. The good news is that about 80 percent of Americans who have access to them are taking advantage of 401(k) matching programs, according to a 2014 report. The bad news, however, is that another report released just this month found that Americans are not really using their matching program to its full advantage. In fact, they are leaving $24 billion in company match funds behind each year. Here’s what that means for you individually.
What Does $24 Billion Mean for Me?
That’s a huge number to digest. Here’s how researchers arrived at it. They examined the retirement funds of 4.4 million participants from more than 500 companies. Twenty-five percent of those participants were not contributing enough of their own money to their 401(k) to take advantage of the company’s full match. $24 billion averaged out to about $1,336 in uncollected employer match funds each year. Over 20 years, the missed funds could add up to over $42,000 per employee.
Here’s another way to look at it. Let’s say you work for a company that matches 50 cents on every dollar you contribute. If you invest six percent of your $50,000 salary, that’s $3,000 per year you are contributing and $1,500 per year your employer is giving you. In effect, you are getting a tax-free, $1,500 raise.
How Much Is Enough?
“How much should I be contributing?” is probably the most common question asked of financial advisors. However, the answer is not always straightforward. “As much as you can” is the simple answer, but that leaves room for a lot of interpretation, and is sometimes a cop-out. Each situation is unique. For example, a 40-year-old that has never contributed to a retirement plan needs to start saving fast, contributing at least 15 percent. There are restrictions, though. For 2015, employees are allowed to contribute up to $18,000 annually or an extra $6,000 if they are over 50. Conversely, a recent college graduate starting his or her first real job at 22 can afford to start at a lower percentage. A good rule of thumb is to contribute at least the maximum that can be matched. Most companies that offer matching will only do so up to a certain percentage of your salary. You want to at least contribute enough to maximize that match.
The best way to accurately assess how much you need to contribute is to talk to a financial advisor that can come up with an overall retirement strategy that includes your 401(k) and other resources available. While a 401(k) is nice in that it does not need constant attention, you should monitor your growth periodically and talk to your financial advisor to see if you are on track. For example, it’s generally recommended that your 401(k) include at least one year’s salary by age 30. How much could that end up being? If you had $40,000 in your 401(k) by age 30 and never added any more money, you would have $600,000 by 65, figuring an average eight percent annual return. That amount will only grow with increased contributions.
Who’s Most at Risk?
Researchers also examined what demographics are missing out the most and what factors contribute to employees’ financial decisions. Here’s what they found.
- Young employees are missing out. Employees under 30 are twice as likely to miss out on employer match programs than employees over 60. This isn’t necessarily because they don’t see the importance. Many young adults have endured unemployment, as well as massive student loan debt. According to USA Today, 40 million Americans are carrying $1.2 trillion in student debt — any extra each month likely goes toward paying that down. Graduate students may still be attending school, balancing the increasing cost of tuition with supporting themselves.
- Lower salaries = lower matching. Forty-two percent of employees earning less than $40,000 annually were not taking full advantage of employee matching, compared to only 10 percent of employees earning over $100,000 a year. It’s understandable that those that make more can contribute more. However, remember we are talking percentages. As illustrated above, even small percentages will grow exponentially over time. Waiting until you start making more is not an effective strategy. You will lose thousands in “free” matching money.
- Middle-age poses new obstacles. The research showed middle-aged employees decreasing contributions. This stage in life often brings new expenses, including the cost of raising children and saving for their college funds. However, the point is that every stage in life presents challenges to saving. Middle-age is not the time to decrease contributions and lose out on valuable employer matching.
- Getting an advisor matters. Employees across all demographics were less likely to miss out on employer contributions when they worked with a financial advisor. For example, among employees earning $20,000 a year, only 18 percent that worked with a financial advisor were still not taking advantage of employer matching. Among the same income bracket, 48 percent that did not get advisory services were not reaping the rewards of employee matching.
Regardless of your income level, age or industry, resolve to take full advantage of your company’s retirement benefits today. Start by gaining an understanding of your plan. How much does your employer match your contributions? Are you leaving money on the table? Commit to regularly increasing your contributions. A good time to do this is with each year’s raise. Lastly, get professional help. Your 401(k) should be just a piece of your retirement strategy. Let an experienced advisor help you create a customized plan based on your retirement goals and your current financial situation. [Advisor name] has more than [years] experience helping people from all different income levels achieve their retirement goals. Contact us to schedule a consultation.
What are the benefits of an effective blogging strategy?
- Establish yourself as a trusted source of information among clients and your peers.
- Show that you keep up with the latest trends and research.
- Increase your SEO by providing search engines with fresh content that includes your all-important keywords.
- Have content to push out to your social media feeds.
- Engage clients through comments within the blog or feedback on your social media feed.
- Brand your firm, showing your personal side.
- Create opportunities for content to be shared, either through your followers’ feeds or industry bloggers that may like your commentary.
BlogMutt has a team of experienced writers ready to provide quality, well-researched content for your blog. Using this team is advantageous in two ways. First, it saves you valuable time. Secondly, you get content written from a fresh perspective. Think of your writing team as a translator from you to your clients, turning technical subjects into content that appeals to the average reader. Contact us to learn more about our services.
Editor’s Note: This post is an example of the longer posts we now offer. You can choose a plan that gives you posts at 250+ words, 600+ words, 900+ words, or 1200+ words. The posts are not only longer, but are written by more experienced writers.