In a feature article in the latest issue of NAPA Net the Magazine, Judy Ward looks at how some leading advisors are helping plans and participants face the challenges of inflation.
If inflation continues to run high, a growing number of financially stressed participants may feel like they need to stop or reduce their deferrals.
“The thing I lose sleep over is that some people are struggling to meet their current budget needs, and if those costs keep increasing, these people will then feel bound to stop putting away any money for their future,” says current National Association of Plan Advisors President Corby Dall, a Sandy, Utah-based advisor at OneDigital Retirement + Wealth. “My concern is that the longer high inflation goes on, and the harder it is for these people to make ends meet, they—if they don’t quit contributing altogether—will reduce their contribution.”
The possibility of deferral decreases is just one of the potential implications for retirement plans and participants of spiking inflation, especially since it comes amid rising interest rates and market volatility. “We’re trying to be a constant source of information and resources for participants. I think we have a significant obligation to help people through this, and we need to lead with empathy,” says NAPA President-Elect Renee Scherzer, a principal of 401K Resources in Scottsdale, Arizona. “Their 401(k) tends to be people’s first—and for many people, only—investment. We need to make sure that we’re providing actionable and meaningful information, in bite-size pieces, so that we can really reach people.”
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