TL;DR

• Retirees face financial hardships relying solely on Social Security benefits, but Product managers in the banking sector can address these challenges by developing personalized retirement solutions.
• Legislative changes linking student loan repayment to retirement savings create an urgency for innovative retirement products; tax data is crucial in exploring that link.
• Tax data can be used to create geographically specific retirement solutions tailored to varying income tax rates and regulations.
• Integrating tax data into product design allows for personalized recommendations that maximize tax advantages and help customers build secure retirement savings.
• Utilizing tax data helps customers hedge against inflation and secure a stable retirement.
• Financial institutions can build brand loyalty by creating personalized retirement products based on individual circumstances.

In an ever-changing financial landscape, retirees face the risk of financial hardships when relying solely on Social Security benefits. Recognizing the limitations of Social Security and the desire for personalized retirement solutions, product managers in the banking sector can play a pivotal role in addressing these challenges. This article explores the power of tax-advantaged retirement products, legislative changes driving the urgency for better retirement solutions, and the critical role of tax data in designing geographically specific banking products.

By leveraging tax data and developing personalized retirement products, product managers can drive company growth, enhance customer satisfaction, and gain a competitive edge in an expanding market.

The Need for Tailored Financial Products

Retirement should be a stage of life characterized by financial security and peace of mind. However, relying solely on Social Security benefits can leave senior citizens financially vulnerable. Statistics reveal the prevalence of poverty among seniors, highlighting the pressing need for tailored financial products that address this issue effectively. According to Gallup, only 43% of non-retired adults expect financially comfortable retirement, an outlook that has been the most grim since 2012.

Social security, while providing a safety net, often doesn’t meet retirees’ financial lifestyle requirements. Product managers who recognize the limitations of Social Security and the risks associated with relying solely on this source of income can build comprehensive retirement solutions that mitigate these risks and offer a personalized approach to financial planning. They can define a new standard in retirement products by designing them with tax data at the center of the wheel. Creating retirement products with tax benefits has been well received by the evolving retirement market, but developing products around tax data that can make a retirement product future-proof.

The Power of Tax-Advantaged Retirement Products

One well-known product that leverages tax benefits is the Individual Retirement Account (IRA), which is pivotal in encouraging tax-advantaged savings. IRAs continue to experience growth in popularity due to their flexibility and tax advantages, making them an attractive option for individuals planning for retirement.

However, using tax data takes the concept of tax-advantaged retirement products to the next level. By incorporating tax data into product development, product managers can unlock rich information that leads to highly personalized financial solutions. Utilizing tax data allows for a deeper understanding of an individual’s financial situation, including income sources, deductions, and credits. This formerly untapped knowledge enables product managers to build tailor-made solutions based on customers’ unique circumstances, ensuring long-term customer loyalty.

Legislative Changes and the Urgency for Better Retirement Products

Recent legislative changes have linked student loan repayment to retirement savings. These legislative updates (addressed by our team in this article) have heightened the urgency to develop innovative solutions that address the evolving needs of future retirees.

In the Forbes article, “How Data-Driven Banking Can Transform The Financial Landscape,” written last year, Ankit Agarwal explains in detail how better data can enable financial institutions to design better products — this includes retirement products. He explains how the rise of online banking, embedded finance, and open banking has increased customer expectations. Banks are now expected to anticipate customer needs and desires, such as providing personalized offers for car insurance or budgeting tips on savings accounts.

He explains that better data can aid financial institutions in creating new and innovative products and services, and with real-time customer insight, banks can predict the products or services customers will likely buy next and can tailor their products and services to individual customer needs, increasing customer engagement and revenue​. Tax data is the richest source of financial information, and by analyzing tax information, product managers will have access to all of the information they need to identify these links and build holistic products.

Harnessing the Power of Tax Data for Geographically Specific Solutions

One specific application of tax data is its ability to create geographically distinct retirement solutions. Product managers can design banking solutions tailored to specific locations by leveraging tax data. Different states have varying income tax rates and regulations, which can significantly impact the amount individuals can save for retirement.

By integrating tax data into product design, product managers can offer personalized recommendations for tax-advantaged retirement products based on customers’ income sources and geographical locations. This approach ensures customers receive tailored solutions that maximize their tax advantages, ultimately helping them build a more secure retirement nest egg. You can learn more about state-specific tax differences and even more in this podcast episode, which breaks down retirement solutions and how utilizing tax can enhance retirement solutions.

Conclusion

As we navigate a period of heightened inflation, the need to maximize every penny of our savings has never been higher; this makes the role of product manager even more significant. Personalized products can help banking customers hedge against inflation and secure a more stable retirement, making it an attractive option for those planning their financial future.

By integrating tax data into product development, financial institutions can create personalized retirement products that cater to each customer’s unique circumstances, drive company growth, and gain a competitive edge in the market. This approach empowers customers to secure their financial futures while simultaneously feeling genuinely seen by their financial institutions.

Tax data gives financial institutions the insights they need to help customers navigate the current high-inflation environment and help them achieve peace of mind while building brand loyalty for years to come.

This content is provided for informational purposes only and should not be construed as tax, legal, financial, or other professional advice. Rules and regulations vary by location and are subject to change, so please consult with an expert if you need specific advice. Any data shared is subject to applicable law and consent.