Fred Barstein CEO & Founder 401kTV with David Lum, Managing Director, SageView, Honolulu
A holistic approach to financial wellness is crucial as it encompasses all aspects of an individual’s financial life, including saving, investing, budgeting, and retirement planning. This comprehensive strategy promotes financial stability by addressing both immediate needs and long-term goals, reducing financial stress, enhancing literacy, and empowering informed decisions. By integrating all elements of financial health, it ensures a balanced, sustainable path to wellness.
Fred Barstein from 401kTV interviewed David Lum, Managing Director of SageView’s Honolulu office, after a TPSU program at Hawaii Pacific University. Lum discussed the unique challenges of saving for retirement in Hawaii, including the high cost of living and the need for multiple jobs per household. He emphasized the importance of auto features and emergency savings accounts to help manage unexpected expenses without tapping into retirement funds. Lum highlighted that many people live paycheck to paycheck and need holistic financial wellness support to make smarter financial decisions.
Lum, with 25 years in investment and retirement, shared that Hawaii’s service-oriented economy and high living costs force many to work multiple jobs, impacting their ability to save. He stressed the importance of automatic features like auto-enrollment and auto-escalation in retirement plans and advocated for emergency savings accounts to prevent plan loans or withdrawals. A holistic approach to financial wellness is essential, as it considers the entire financial picture, promoting smarter spending and better long-term outcomes.
Read the Full Transcript Here:
Fred Barstein:
Fred Barstein with 401kTV. Here in beautiful Honolulu where we just completed a TPSU program at Hawaii Pacific University. I’m here with David Lum, who is our adjunct lecturer. Welcome David.
David Lum:
Thank you, Fred.
Fred Barstein:
Okay if we ask you a few questions?
David Lum:
Sure.
Fred Barstein:
And David is the managing director of the SageView office here in Honolulu. He’s been an investment and retirement professional for 25 years, and SageView is one of the largest retirement specialty firms, 24 offices around the country, and billions and billions of dollars under management. So today, David, at our program, it came up of the unique challenges of saving for retirement in Hawaii, which I think pertain to any area where the cost of living is high. So the difference is it’s true for everybody here and throughout. So what are the challenges that people face here for retirement, saving for retirement?
David Lum:
Well, as you know, the cost of living is really high. But on the flip side of that is the incomes are not that low. We live in a service economy over here, and so people work really, really hard to make ends meet. And many people work two or three jobs. A typical household will have three plus jobs in it in order to make ends meet. And so there’s a good reason why the national statistics show that we get fewer hours of sleep here in Hawaii than any other state in the union. It’s because people are working really hard.
Fred Barstein:
They’re working hard. But this is supposed to be where you relax and the environment is relaxed here.
David Lum:
The price of paradise, you know.
Fred Barstein:
The price of paradise. So how do you help people in those kinds of situations, their budget’s strapped, and they’re working hard, so they don’t have a lot of time to focus on this? What do you do? What do you recommend?
David Lum:
Yeah, I think that auto features make a whole lot of sense, but we take it a little bit step further because we think that it’s important for everyone to have emergency savings on the side. So instead of just direct depositing their funds into their checking account, we encourage retirement participants to, besides doing their 401(k), save some money into a savings account and just split their direct deposit into two different bank accounts, a savings and a checking. And the savings is there for unexpected expenses. Instead of having to take out a plan loan or hardship withdrawals, or have to separate from service just to get the distribution, it’s far better for them to just plan wisely and create an automatic savings that’s outside of the 401(k) to supplement their non-retirement needs.
Fred Barstein:
Right. So when you talk about retirement, it’s very holistic, right? You can’t just say, “Save for retirement,” say, you got to look at their situations. And-
David Lum:
Yes, financial wellness is huge over here. It’s so important because, well, we live in a consumer economy everywhere in the United States, so we are not immune to those temptations everywhere around us. And the reality is that a large percentage of the population here is living a little bit beyond their means. They probably manage their budget just in time. We’re all living from paycheck to paycheck. And so if there’s just a little disruption in the paycheck, or if you have a little bit of extra unexpected expenses, things go awry. And that’s where you have the plan loans, you have a hardship withdrawals and things like that. And so it’s just trying to support participants in helping to be a little bit more mindful about how to be smarter on those small decisions that can make a big impact in the long run.
Fred Barstein:
So this was your first TPSU program. What was your impression and what do you think plan sponsors got out of this?
David Lum:
I thought it was a great program, and it was an honor and privilege to be a part of the first inaugural TPSU here in Honolulu Hawaii. I really appreciate that opportunity, Fred. But I think that it was fun and engaging to have these presentations, but really ultimately it was the opportunity for the plan sponsor community here in Honolulu to come together and share ideas, interact with each other, and collaborate to come up with what works for them and just from learning from each other. Because ultimately, we’re all here for the same purpose to try to support the employees in having a better retirement future.
Fred Barstein:
Well, hopefully you’ll invite TPSU back. We love coming to Hawaii. Even though we live in Jupiter, Florida, it’s still wonderful to come here. So thanks for your time and your support of TPSU. And thank you for watching 401kTV.
