August 18, 2010

This is bonus coverage from “Too Late” in the September 2010 issue of Credit Union Management magazine.

Most people grossly underestimate their living expenses in retirement, says Pamela Schwartz, a certified financial planner at $167 million/18,000-member Alcoa Tenn Federal Credit Union in Alcoa, Tenn., a suburb of Knoxville. Utility bills are easy to remember, but those little off-hand expenses like haircuts, pet food and gifts for grandchildren add up fast.

Barlow says those expenses are the one thing people can control.

“Financial planning clients focus on the markets and how much their accounts go up or down. And that’s the thing they don’t have any control over, virtually none. What they can control is what they spend, and that segues into what they save,” Barlow says.

You can also control your appetite for risk, and a CFP will help you determine your risk tolerance for investments. CUES member Stan Baron, 66, recently retired as president/CEO of $375 million/32,000-member Chetco Federal Credit Union in Harbor, Ore. A few years prior to his retirement, he was shocked to discover how conservatively he and his wife had been investing.

In 2006, Chetco FCU opened a fee-only, wealth-management firm called Integrity Financial Planners, a credit union service organization wholly owned by Chetco FCU. Although Integrity Financial Planners primarily serves Chetco FCU members, a growing niche market is CEOs of other credit unions, who appreciate the privacy of working with a wealth management firm not associated with their own credit unions. Baron and his wife spoke with a CFP at Integrity Financial Planners and learned that despite his nearly four decades in the industry, including three as CEO to three credit unions, there was a lot he didn’t know about financial planning.

“Most startling was finding out the different levels of risk tolerance and how wrong my wife and I were regarding risk tolerance,” Baron says, adding that as a CEO he was accustomed to managing hundreds of millions of dollars. “But it’s totally different when it’s your own money.”

The recent economy has changed retirement plans across the nation. CUES member Rick Webb, 64, is president/CEO of $76 million/11,200-member Atlantic Financial Federal Credit Union in Hunt Valley, Md. Webb, who has a retirement countdown clock on his desk and is looking forward to more family time and fewer volunteer commitments, delayed retirement after seeing his 401(k) lose a lot of value.

“My 401(k) is inching back up to maybe a 301(k) so I’m not in quite the same financial picture as I was a couple of years ago,” Webb says.

Amy Knapp is a freelance journalist in Monona, Wis. She is hoping, planning and working to retire somewhere warmer than Wisconsin.