It was only four short years ago that the banter in our participant education sessions revealed that most employees were in the same mode as the capital markets. In a word, they were dismal.  Sounding already defeated, it was common to hear things like “I’m never going to be able to retire now,” and “why bother planning…nothing seems to work anymore”.

As the markets have climbed all the way back, so have many people’s financial outlooks, notwithstanding some recent jitters triggered by the banking crisis in Cyprus. For those who have invested throughout the turmoil, their steely patience has been rewarded. Now, they are asking about how to increase their contributions to the plan, conducting retirement readiness self-analyses and starting to look forward to a future that will include retirement.

Perhaps the more appropriate question is why are they thinking like this? And why now?

Investors Learning About Themselves

Some are starting to understand some important things. Not about the markets. About themselves.

The market turmoil that we have endured over the last fifteen years has been very damaging to our collective psyches. There are two important things that we can’t run from: The first is the high probability that another 20+% drop in the stock market will occur at least one more time in a baby boomer’s career, and a few more times for those just starting out.

The second is that in reference to the 2008-09 drop, no matter what happens next, we are all four years older. That’s four years closer to retirement. Removing the account, stopping the payroll deductions or moving the investments to a money market fund that pays 0.02% are not long term viable solutions for successful outcomes. We in the industry know this but some of those on Main Street are starting to understand it, as well. The market comeback has enabled many people to start to become considerably more optimistic about their futures than they were back then.

Realizing that there are four less years to plan, they now recognize the need to start immediately. They also now understand that the biggest single factor that will predict a successful outcome is that they need to invest enough to begin with and do so through good times and bad.

It’s not enough to force-feed good behavior through auto enrollment and auto increases in participant contribution levels. Deliver quality education programs to participants and really listen to what they are saying.

Harris Nydick is a Co-founding partner and Co-Managing Member of CFS Investment Advisory Services, L.L.C. in Totowa, NJ. He can be reached at or 973.826.8800.


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