Unions are known for their great employee benefits, but no matter how impressive these perks may be, many union-represented employees still struggle to make sense of their finances. As a CERTIFIED FINANCIAL PLANNER™ professional with a large union client base, I have 15 years of experience helping individuals and families make the most of their finances. Throughout my career, I’ve seen many union-represented employees come in with very similar financial challenges.
While each client’s story (and finances) is unique, there are three trends I’ve seen over and over. If you are a union employee looking to revamp your financial picture in 2022, make sure you’re aware of these three financial planning challenges.
One of the biggest financial challenges I see with union-represented employees is the false sense of security that being a part of a union can provide. Yes, the benefits that come from the collective bargaining power of a union are often unmatched by the non-union alternative. Better wages, better health coverage, and better retirement benefits are just a few of the advantages.
But while union-represented employees often think everything is covered, there are actually unmanaged holes in their finances. This can include things like investment management, comprehensive retirement planning, and tax-minimization strategies. By solely relying on the union benefits and failing to account for other aspects to your finances, you could be putting your long-term financial future at serious risk.
Along with this false sense of security, I also see many union clients overexposed to risk in the years leading up to retirement. For better or for worse, the last 10 years before retirement are the most critical, and your portfolio needs to match your risk capacity during this time. For instance, if the economy goes into a recession and you lose your job or your hours are reduced, your portfolio will need to compensate for the loss of these high-earning years. If you took on too much risk, your investments could lose a lot of value just when stability is needed the most.Proper asset allocation and diversification are crucial components of a solid investment plan. They can’t guarantee a minimum level of return, but they will at least act as buffers against the inherent volatility of the market. Reduce your exposure to risk by keeping your investments in different parts of the market and utilizing an allocation strategy that considers which components of your portfolio can move together and which can act as a hedge against downside risk.
Imagine you are building a house. The foundation, the studs, the beams, and the joists all have to align in order for your house to be structurally sound. If your joists are too far apart, or the foundation isn’t properly laid, you run the risk of the whole thing falling apart. Comprehensive financial planning is similar in that it requires each piece to be aligned with the others in order for your finances to be structurally sound. Many union employees think they have done plenty by saving diligently, but there are often critical pieces of coverage missing.
The fact of the matter is that savings are often not enough to ride out unforeseen major life events. Proper risk management is key to both staying afloat during uncertain times and planning for the future. Union employees should incorporate comprehensive planning techniques by being aware of the major categories of loss that could jeopardize your assets, and preparing a mitigation strategy to protect against each.
Be sure to evaluate your life, health, and long-term care insurance policies. These expenses are often overlooked and can have devastating effects on your accumulated wealth. Estate planning is another important part of a comprehensive financial plan that should be considered if you want to pass your hard-earned wealth to the next generation.
Though union-represented employees experience certain financial challenges in planning for the future, that doesn’t mean their financial plans have to be overwhelming or complicated. We at Matarazzo Staiger strive to provide the best comprehensive planning possible by educating and helping our clients with their unique financial needs. If you would like to learn more about how we help union employees navigate their savings, investments, and comprehensive planning needs, schedule a no-obligation introductory meeting by emailing me at daniel.staiger@raymondjames.com or calling (631) 319-6777.
Daniel Staiger is a partner at Matarazzo Staiger Wealth Management and Financial Advisor with Raymond James Financial Services. Matarazzo Staiger Wealth Management is an Independent Practice and our team is committed to helping families, pre-retirees, and union employees build a sense of security and confidence around their financial future. With more than 10 years of experience, Daniel is dedicated to providing trusted advice and tailored solutions that help his clients realize their financial potential. He is known for building relationships with his clients so he can better understand their values and the goals they want to pursue. As a CERTIFIED FINANCIAL PLANNER™ and Chartered Retirement Planning Counselor℠ professional, Daniel specializes in serving union employees, such as tradespeople and teachers, with well-thought-out guidance and a personal touch. When he’s not working, Daniel spends his time pursuing interests such as guitar, volleyball, golf, and cooking. He is also an active member of his church. To learn more about Daniel, connect with him on LinkedIn.
Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.
Every investor's situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification and asset allocation.
Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional.
Diversification and asset allocation do not ensure a profit or protect against a loss.
