Connecting state and local government leaders
COMMENTARY | Public sector employees need more active support to build financial security for retirement. Here are three ways to help them.
Financial Literacy Month may be behind us but focusing on financial goals and continuing to build an understanding of retirement savings is something that should be an ongoing focus year-round.
Here are the necessary steps public sector employees should consider taking to improve financial wellness to help them achieve life’s biggest financial goal: retirement security.
Budgeting and Managing Debt
Amidst ongoing inflation and market volatility, employees’ main priorities should be saving, reducing debt and improving financial health. One way to start is by looking at your income and what you are spending. It’s hard to achieve the most basic tenet of financial wellness -- not spending more than you are bringing in -- if you don’t know what those numbers are. While it sounds simple, you’d be surprised how many people don’t know what these figures look like or haven’t checked in on them in some time.
In addition, as you think about what money is going out, it’s also important to look at what types of debt you’re holding. High-interest credit-card balances lead to high fees and reduce both your spending and savings ability. Making a conscious effort to pay off balances monthly, or paying more than the minimum amount due, can help reduce that debt.
For public service employees who are carrying student loans, there are options to help reduce that debt. The Public Service Loan Forgiveness Program forgives the remaining balance on your direct loans after you have made 120 qualifying monthly payments while working full-time for a U.S. federal, state, local or tribal government or not-for-profit organization.
Contributing to Savings and Retirement
Allocating incoming and available cash for monthly expenses, short-term savings and long-term savings (like retirement) can help balance spending and match your resources to your goals. Most financial planners suggest having three to six months’ worth of expenses in an emergency fund to prevent you from having to borrow against your retirement funds in the event of an emergency.
Regularly checking your retirement savings contributions can also help you stay on track. As many people start their retirement plans with a set dollar amount or a percentage of salary contribution, it’s important to adjust those numbers as you grow in your career.
When it comes to retirement planning, many people set it and forget it. There are products like target date funds that enable you to set your retirement year and not worry about it. That said, it’s prudent to check each year to see what might have changed as it relates to your retirement. If your retirement horizon or family situation has changed, for example, these factors may prompt a change in your retirement planning.
Taking Time to Reassess
As you age, retirement eventually starts to feel within reach, and you may start to feel a sense that all of your planning is finally going to come to fruition. Usually by this time, you have accumulated more and can benefit from taking a hard look at the financial planning process. You might decide it’s time to reassess your investments and consider moving away from the set-it-and-forget-it model to a more actively managed account. This enables you to look at different types of modeling for your investments beyond just target dates.
Lastly, remember to review your insurance. People always are underinsured. Death is not something people want to think about, but life insurance is a very important way to take care of the unforeseen and provide resources for your family.
The overall notion: have a plan. It could be sophisticated, or it could be simple. There are a lot of good online digital tools to help.
Lynne Ford is the CEO and president of MissionSquare Retirement, which helps to ensure retirement security and wealth protection for Americans of all income levels.