A Financial Wellness Plan Can Help Pave the Road to Retirement
March 17, 2021
If we’ve learned any lesson over the past year, it’s that no matter how carefully we plan and prepare, we’ll likely encounter unexpected hurdles. While a global pandemic has certainly underscored the need to pay close attention to our physical wellness, it has also revealed the need to shore up our financial wellness.
According to Price Waterhouse Coopers 9th Annual Financial Wellness Survey conducted in January 2020, financial matters were the top cause of stress for employees even well before the pandemic hit in earnest. More than one-third of full-time employed millennials, Gen Xers, and baby boomers had less than $1,000 in emergency savings. Only 29% of women said they would be able to cover their basic necessities if they found themselves out of work for an extended period, compared with 55% of men. And more than half of millennials and Gen Xers and 35% of baby boomers said they would likely use their retirement funds for something other than retirement, with most noting it would be for an unexpected expense or medical bills.1
Although tapping your retirement savings can help you get through a crisis, it can hinder your ability to afford a comfortable retirement. Having a plan to guard your financial wellness throughout your working years can help you avoid putting your retirement at risk.
What Is Financial Wellness?
The Consumer Financial Protection Bureau (CFPB) defines financial well-being as:2
- Having control over day-to-day and month-to-month finances. In order to achieve this, your expenses need to be lower than your income.
- Maintaining the capacity to absorb a financial shock. This typically refers to having adequate emergency savings and insurance.
- Being on track to meet financial goals, meaning you have either a formal or informal plan to meet your goals and you are actively pursuing them.
- Having the financial freedom to make choices that allow you to enjoy life, such as a splurge vacation.
The Four Elements of Financial Well-Being
| Present | Future | |
| Security | Control over your day-to-day, month-to-month finances | Capacity to absorb a financial shock |
| Freedom of choice | Financial freedom to make choices to enjoy life | On track to meet your financial goals |
Source: CFPB, September 2017
The CFPB has identified several key factors that contribute to an individual’s ability to achieve financial well-being. Among them are: (1) having the skills needed to find, process, and use relevant financial information when it’s needed; and (2) exhibiting day-to-day financial behaviors and saving habits.
Assistance Is Available
Many employers have begun offering financial wellness benefits over the past decade. These programs have evolved from a focus on basic retirement readiness to those addressing broader financial challenges as health-care costs, general finance and budgeting, and credit/debt management.3
In addition, a financial professional can become a trusted coach throughout your life. A qualified financial professional can provide an objective third-party view during tough times, while helping you anticipate and manage challenges and risks and, most important, stay on course toward a comfortable retirement.
1) Price Waterhouse Cooper, May 2020
2) Consumer Financial Protection Bureau, January 2015
3) Employee Benefit Research Institute, October 2020
PPP Forgiveness Application Deadline
Congress passed The Economic Aid Act which changed the deferment period from 6 months post covered period to 10 months post covered period. For example, if your covered period ended June 30, 2021, under the new guidelines the earliest your first loan payment wouldn’t be due until April 2022, and you have until then to request forgiveness. Please use the following calculation to help you identify when your forgiveness will be due:
- PPP borrowers may select a covered period anywhere from 8 weeks to 24 weeks.
- RCU is automatically calculating your loan due date based on a 24-week covered period, if you intend on using a shorter covered period please inform us immediately as this will impact your due date.
- Your correct deadline will be reflected in your online banking account.
If all or part of your PPP loan is not forgiven, your first loan payment will be due the first of the following month after a decision is made by the SBA.
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