Construction workers are the backbone of our community, building and maintaining essential infrastructures. After decades of dedication and service, they have earned a much-deserved rest in retirement.
With the right financial advisors, you can offer your construction workers a plan that gives them enough income to put their feet up for a well-earned retirement. Here are some of the unique challenges financial advisors can help with and ways the right team of advisors can optimize a construction worker’s retirement plan.
Addressing Challenges Unique to Construction Workers
Financial advisors understand the specific hurdles construction workers face — and how to help navigate them.
Here are 4 key ways to help construction works appropriately plan for their retirement.
- Tailored Retirement Planning
- Education and Empowering (clearing up misconceptions should just be a part of this section – not a new section…in my opinion)
- Managing Risk & Diversification
- Performing Regular Reviews and Adjustments
Tailored Retirement Planning
Construction workers have unique career paths. Some may change their area of focus multiple times. For instance, they may go from roofing to foundation work, painting to window and door installation, or even from the residential to the commercial sector. These changes tend to come with differences in payment amounts and structure. For example, a worker may go from getting hourly to contract-based pay.
Financial advisors can take these circumstances into account and provide customized strategies, such as:
- Consolidated 401(k) accounts. This may involve facilitating rollovers from one company to another, which may be preferable to settling for an expensive cash-out.
- Maximizing employer and union benefits. Financial advisors ensure workers contribute enough from each check to take advantage of full 401K matches. They can also factor union pension options into the plan.
- Diversifying investment portfolios. Ensure that each of your construction workers has a balanced portfolio that minimizes both risk and fees.
- Building an emergency fund. Advisors understand how to build emergency funds and how to tailor them to a construction worker’s risks and lifestyle. This may involve saving between three and six months of expenses. With these funds in reserve, workers can avoid digging into their 401(k) and making a costly early withdrawal.
- Creating tax-efficient strategies. It can be difficult to understand the intricacies behind traditional and Roth 401(k) plans. Financial advisors can walk workers through the advantages and considerations involved in each option.
Educating and Empowering
Knowledge is power, especially regarding retirement planning, and financial advisors prioritize empowering construction workers with the understanding they need to build an effective plan.
In some cases, this involves explaining relatively familiar concepts. For instance, financial advisors can explain how employer matching works, outline its long-term benefits, and demonstrate how workers can use it to boost their retirement savings.
Another area where financial advisors can make a big difference is deciding which investments best fit each worker’s needs. The right advisors can consider each individual’s risk tolerance and help them select investments that balance risk appetite and retirement goals.
Retirement investing can be complicated, so it’s no surprise that there is a lot of confusion and misconceptions about it. For instance, the tax advantages of traditional and Roth 401K plans can be difficult to understand. However, financial advisors can clear up misunderstandings and help workers make the best decisions.
As another example, some construction workers, like others, may feel Social Security will be enough to cover their needs during retirement. This is typically not the case, and a financial advisor can break down the numbers and explain why.
Others feel they may not be able to dedicate sufficient funds to retirement and still have enough left over to meet their current financial needs. However, financial advisors can guide workers through how to both fund their retirement and cover their current expenses.
Managing Risk and Diversification
Managing risk and diversifying investments are central to ensuring long-term financial security. Getting the most out of these strategies involves:
- Assessing each construction worker’s risk tolerance. Advisors know which questions to ask to accurately assess the risk tolerance of each professional and then recommend the best way to allocate their assets accordingly.
- Diversifying portfolios. Investment advisors can shed light on various options for investment types. These may include combinations of stocks, bonds, cash, and real estate.
- Adjusting investments over time. Advisors understand how to shift allocated funds from higher- to lower-risk investments as retirement approaches. This can protect construction workers from market events that could impact their retirement plans.
Performing Regular Reviews and Making Adjustments
The construction industry changes drastically and quickly, and this can have a considerable impact on the income of your workers. That’s why financial advisors conduct regular reviews of retirement plans. This may involve:
- Holding annual meetings. Advisors recommend at least one meeting each year. This enables them to have important conversations about analyzing the retirement portfolio with construction workers.
- Designing flexible contributions. Advisors help adjust contributions according to fluctuations in income. This is essential to maximizing construction workers’ retirement income streams.
Give Your Construction Team Access to a More Comfortable Retirement with the Right Financial Advisors
When you partner with a financial advisor, you can dramatically improve your construction team’s job satisfaction and sense of trust. Construction can be unpredictable, making it difficult to plan a successful retirement unless you understand your options and how to use them. By partnering with financial advisors, construction workers can easily build effective strategies that lay the groundwork for a fulfilling retirement.
Connect with Twelve Points today to learn more or to get started.
