Historically, credit unions have had an older membership when compared to the national average age, but in recent years the age gap between the national average and the credit union average has been increasing. As the graph below indicates, just twenty years ago there was a four-year difference between the average American’s age and that of a credit union member. Now the two diverge by an entire decade. Aging membership is clearly a critical issue for credit unions.
While this trend is concerning on its own, it becomes more alarming when you couple it with the fact that the large Baby Boomer generation is approaching retirement. January of 2006 marked a milestone for the Baby Boomer generation as the oldest segment of this group turned 60. This event signals a pending shift in the relationship between Baby Boomers and their financial institutions.
Although many people think of retirement as just a transition from the office to the golf course, there are several other changes that take place. One of the most important changes is the shift from wealth accumulation to wealth disbursement. These individuals have spent years saving (hopefully) and now will be tapping into these funds to replace their employment income.
This shift can and will have an immense effect on credit unions as this demographic makes up a large percentage of their membership. Not only will these members no longer be depositing money, they will actually be drawing down balances – adding to the ever present challenge of share growth, and leaving a gap on the credit union’s balance sheet. In addition, many of the products and services previously used by the member may become irrelevant, no longer fitting with their financial needs.
While many credit unions already offer retirement products such as 401k rollover, trust services, and CDs, these and other products will become vital as the vast number of baby boomers enter retirement. Credit unions need to start evaluating their retirement programs to ensure they can meet these members’ changing needs and retain their relationships as the primary financial provider.
To learn more about the effect of retiring baby boomers, and how to meet their needs, join us for the webinar: Retiring Baby Boomers: Strategies to Transition with Their Changing Needs.