Sponsored by The American College of Financial Service
By David A Littell
In the last decade, the number of retired Americans has increased by almost 30%. And with 10,000 Baby Boomers turning 65 every day, the numbers of retirees will only continue to grow.
How prepared is the financial industry to handle this?
Let’s start with a basic fact: the financial needs and concerns of those approaching and living in retirement are fundamentally different than the financial needs and concerns of younger adults. Rather than focusing on accumulating wealth, older adults must determine the best ways to use their resources to meet their spending needs throughout retirement.
How do they maintain a comfortable lifestyle while ensuring they don’t run out of money?
The more prepared you are to help clients answer that difficult question, the more value you’ll be able to offer the expanding ranks of older adults. To provide the most assistance, you’ll ultimately want specialized training, but there are steps you can take right now to help older clients prepare for retirement. Specifically, you should go over a series of questions that address key planning considerations.
1. Work/career questions:
- Does your client hope to retire fully or work part-time?
- What employment possibilities are available for working in retirement?
- How much would your client like to work in retirement and for how long?
2. Leisure-time questions:
- Does your client have personal, professional, or charitable goals in retirement?
- What activities does your client see replacing the time they were working?
- Are there new activities your client wants to try or hobbies they want to take more seriously?
- How will they replace “meaning” they may have found through work?
3. Relationship questions:
- What does your client’s support network look like?
- What effect will your client’s retirement have on family members?
- Does your client see retirement as a time to make new friendships or renew old ones?
4. Income and benefits questions:
- Is full-time retirement financially feasible?
- What plans have been made for health insurance benefits?
- How much income will your client’s investments and retirement benefits generate?
- What steps does your client need to take to receive benefits?
5. Retirement planning questions:
- What are the core factors for your client to enjoy retirement?
- If there is an unexpected financial or medical setback, is there a backup plan?
- Does the overall plan meet the demands of personal, social, and financial changes?
With these and similar questions, you and your client can establish reasonable goals and expectations for retirement, which you can use to develop a strong financial plan. While it’s a form of financial planning many advisors lack experience in, it’s one that will increasingly be in demand. Advisors who hold the Retirement Income Certified Professional® designation are recognized as having received specialized training in how to structure effective retirement income plans, how to mitigate risks to the plan, and how to create a sustainable stream of income to last throughout a client’s retirement years.
The more expertise you have in retirement planning, the more value you can provide and the broader your client portfolio can be.
David A Littell, JD, ChFC®, holds the Joseph E. Boettner Chair in Research at The American College of Financial Services and is an expert in retirement planning and understanding the older client.
Learn more at TheAmericanCollege.edu/RICP.