BMO Initiates Retirement Readiness Program

The program consists of bi-monthly communications with employers that sponsor 401(k) or other retirement savings plans. “Our goal is to provide employers with innovative ideas and tools that prompt employees to address key retirement issues,” said Todd J. Perala, director, relationship management of BMO Institutional Trust Services.  

Issued in March, the first Retirement Readiness initiative is designed to help employers persuade their employees to engage in an individualized retirement readiness boot camp.   

The logistics of a readiness boot camp are: 

• Employees who plan to retire within five years estimate monthly retirement expenses, taking into account household and food expenditures, standard health care, mortgage and other loan payments (if applicable), taxes, and miscellaneous expenses, including apparel, dining, travel and entertainment.  
• Employees are then assisted in approximating their total monthly income from Social Security, retirement jobs and investments. Future investment income should represent no more than 4% of financial assets, calculated on an annual basis. 
• For a period of four months, employees attempt to remain within self-imposed spending parameters and are urged to keep a careful record of expenditures. 
• At the end of the boot camp period, employees assess whether they may need to reduce their spending levels in retirement, increase their savings or alter their investment approach. 

Perala noted that many employees nearing retirement have an unrealistic understanding of how much income they will require on a monthly basis. “Self-imposed retirement boot camps compel employees to take a realistic look at the type of lifestyle they will be able to afford when regular paychecks stop,” he said.