OUR MISSION

The mission of Ironbound Financial Education is to provide companies, and other organizations, the resources to enable their employees, or members, to completely understand  their retirement plan and make informed financial decisions in order to build the individual wealth necessary to afford typical lifetime expenses such as buying a home, paying for college and withstanding unexpected financial emergencies.

OUR VISION

We believe everyone should be able to retire to the same lifestyle they enjoyed while working.  We also believe that preparing for retirement is the responsibility of the individual.  We look forward to a time when everyone has the information necessary, and acts on that information, to begin planning for retirement when they enter the workforce.

THE PROBLEM

Financial literacy is deficient in our country as illustrated by excessive personal debt, including student debt; the profusion of payday lenders and, although, neither the least nor the last, a failure to prepare for retirement.

A variety of articles and studies arrive at different numbers, but the common thread is that Americans are not saving nearly enough for a comfortable retirement.  The population is divided into Baby Boomers, Generations  X and Y and now we have the Millennials.  They may have different labels, but they all share the same shortfalls in saving for retirement.

The experts agree with me, or vice versa.  In an article in USA Today, Robert Powell writes,”Consider. Americans presently save on average 5.5% and 401 (k) plan participants deferred, on average, 6.8% of their salaries into retirement plans in 2015. But those savings rates are far below what ‘s needed to fund retirement given today’s markets, according to researchers, David Blanchett, head of retirement research at Morningstar Investment Management, Michael Finke, dean and chief academic officer the American College of Financial Services, and Wade Pfau, a professor of retirement income at The American College of Financial Services.”

I don’t have any figures that say we are in some type of retirement crisis, but I do see a lot of people who should be sitting on their front porch, but instead are clerks in stores where I used to see high school and college students.  Lack of retirement funds may not yet be a crisis, but given the uncertainty about the solvency of Social Security and the fact that we are living into our 80’s and 90’s, there is a crisis coming.

My personal experience is that very few people understand the retirement plan that is sponsored by their employer, and do not understand that if their employer does not sponsor a retirement plan, they should develop their own through an Individual Retirement Arrangement (IRA). They also do not understand the time value of money; a small amount of money invested early in life will  grow  to a large amount over time.  Catching up later in life becomes very difficult, if not completely impossible.

Another misunderstanding is that the government through Social Security will provide enough for that comfortable retirement.  What is also not understood is that they are responsible for their own financial well being, to include retirement.

THE SOLUTION

The solution is education and training.  Unfortunately, financial education taught in the classroom does not appear to carry through into the real world.  I taught personal finance at the college level.  About half the students took it to heart and left me with the impression that they would achieve financial success.  The other half saw it as another course to get through but could not see the relevance to their personal lives.  I have seen it as a course taught to freshmen in high school; again irrelevant.  Taught in the first half of the senior year in high school might work for some. Forget about the last semester of high school.  Do you remember doing much of anything during your last semester of high school?

Financial literacy, achieved through education and training can best be accomplished once someone is working and it becomes relevant.  Now there are bills to be paid; cars to maintain, children to be fed , clothed and educated and any other number of financial obligations that “No one ever told me about.”

The Department of Labor  has made substantial changes to the Employee Retirement Income Security Act or ERISA that were originally scheduled to take effect April 10, 2017, but have been postponed.

The Department of Labor’s Conflict of Interest rules, or the Fiduciary Rule, requires that anyone providing advice about a retirement plan must be a fiduciary, that is the person providing the advice must put the investor’s best interest first.  In writing these rules the Department of labor advocates four categories of investment education: Plan and investment information; General financial, investment, and retirement information; Asset allocation models and Interactive investment materials.

OUR APPROACH

We develop a presentation tailored to your specific retirement plan that follows the Department of Labor’s guidelines. Our  presentation will completely explain:

Plan and Investment information:

An explanation of the plan and the need to plan for retirement. Complete description and explanations of all underlying investments including composition, historic returns, risk, and all fees associated with the investments.  We emphasize an understanding of the underlying management fees, since higher fees will significantly reduce the growth of investment accounts over time.

General financial, investment, and retirement information:

 Basic investing information to include; “paying yourself first”, dollar-cost averaging, diversification, risk vs. return, identifying individual risk tolerance, effects of inflation, difference between asset classes, estimating retirement needs, understanding the time value of money. Explanations of Social Security retirement benefits and retirement age restrictions are included.

Asset allocation models:

An explanation of the benefit of diversification and how a combination of different investments can provide the maximum return while minimizing the risk of a stock market down turn.  Asset allocation pie charts using the retirement plan investments are illustrated.  Different models are developed to coincide with age, so that the asset allocation for a 25 year old is more aggressive than the asset allocation for a 55 year old.