Much ado is already being made about the great generational wealth transfer on the horizon. We’ve made some ado of it ourselves.
But before the big wealth transfer even, there’s another one on the horizon:
Retirees dramatically consolidate their FI relationships as they enter retirement because they want to simplify their lives and hold onto the FIs that will meet their changing financial needs.
What does this mean for credit unions? Read on to learn more—and to see what Silvur is doing about it.
Retirement First, Generational Wealth Transfer Later
It’s true that somewhere around $70 trillion dollars will transfer from aging generations to their inheritors. That’s a ton of money—and a ton of potential lost deposits.
But that’s a topic for another day (and a future blog about the fintech Ribbon).
Let’s address the more important, immediate reality:
Long before everyone passes down their wealth, they retire. And during retirement, which averages 20+ years, people still lead rich, vibrant financial lives. Except there are a few notable changes:
- They switch their direct deposit from W-2 to Social Security;
- They consolidate accounts to simplify finances; and
- They change their financial management strategy to accommodate no income, reduced income from part-time work or other revenue sources, and a new set of costs.
If you aren’t prepared to assist members through the above issues as they move into retirement, then you should be prepared to lose those members.
What’s At Stake for Retiring Credit Union Members
There are two big things that credit unions should be prepared to help with as their members prepare for and enter retirement:
- Assist with switching from W-2 to Social Security payments. On average, Social Security payments represent $500k lifetime value per member. If you value deposits, you should be ready to capture that income.
- Improve member engagement with members age 50+. This demographic holds over 80% of US personal wealth. The FIs positioned to meet their changing financial needs will grow through the financial consolidation phase at the expense of other legacy providers.
But is this all easier said than done?
Maybe.
Especially when it comes to member engagement with members age 50+, you need a robust strategy. Education is part of it—helping retirement-age people understand and prepare their finances is a sure way to build loyalty.
But you might also consider providing simple, easy-to-use support for member transitions into retirement. Helping them with Social Security, Medicare, and other retirement-era changes will be critical.
Introducing Silvur
If you haven’t heard of Silvur yet, color us legitimately surprised. They’ve been winning awards left and right, and for good reason:
Everything we said above is true, and nobody else is providing a turnkey solution to help credit unions expand their share of the $70 trillion retirement wallet.
Here’s the nitty gritty about what they’re doing:
- Retirement education: over regularly updated 800 modules with data from trustworthy sources (like ssa.gov) to keep your members informed.
- Powerful and intuitive calculators: members can use these to help them make critical decisions.
- Personal retirement scores: tells members how long their savings will last and show what they can do to impact that number.
Most importantly, Silvur increases the value of the credit union relationship for members aging into and living through retirement so that when they consolidate accounts, your credit union is a must-keep institution.
Personally, we’re really impressed by what they’re offering:
A way to retain and grow deposits in a demographic that has a) plenty of life left to live, and b) a high chance of attriting during retirement.
Want to see more? (You should.)
