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What Successful Retirement Planning Looks Like

With Social Security in doubt, retirees have lifestyle, healthcare and long-term care questions for financial advisors that robos can’t answer.

By Charles Cumello

Just about everything related to personal finances and how people view their wealth changes when they retire. Aside from the financial decisions that need to be made, the emotional and psychological aspect becomes even more important and impactful. Going from the accumulation phase of one’s life to the distribution phase is a tremendous change financially and emotionally. A component, if not the key component, that people close to retirement are thinking about is whether they will have enough money to last throughout retirement and maintain the lifestyle they’re accustomed to and want to lead. Even more so now, in the current economic and political climate, retirees are feeling challenged. Concerns about inflation, the new-found volatility in the financial markets, healthcare administrative changes, healthcare costs and long-term care issues are among the many issues keeping retirees up at night. Those are not the only concerns causing insomnia. Each person or family has their own unique family dynamics that cause stress and worry. While retirement is not a new topic, in the last few years it has become an even more daunting issue that people are trying to find ways to navigate. It’s possible, and very probable, that a significant number of retirees and pre-retirees feel unprepared to navigate financial shocks and unexpected expenses or circumstances that they may face in their retirement years.

survey by Essex Financial of over 1,000 Connecticut residents found that more than half (58 percent) of respondents don’t believe, or not sure, that Social Security will be an available resource for their retirement income plans. This is a prime example of the worry that many Americans deal with. The realization they may have to fund their own retirement with their assets or income stream, possibly for a very long time. Furthermore, the survey results also point to what we all know anecdotally. Rising healthcare costs are the prominent concern among those planning for retirement.  Thirty-seven percent of the respondents cited future medical or long-term care costs as their greatest issue as they contemplate retirement. In addition to this issue, not having enough money saved to maintain their lifestyle and the fear of outliving their savings came in at 27 percent. 

Financial advisors with clients nearing retirement or in retirement need to be prepared to answer, and ask, some critical questions that are not just financial in nature. For example, what will my retirement look like given my assets and expenses? What type of retirement does a client envision? If married, do both spouses share the same vision? Successful retirement planning is a balance sheet and income statement conversation—assets, liabilities, income and expenses—but also about life in general, lifestyle, life planning and family. These personal issues are as hard, or oftentimes much harder to deal with than managing the investment side of things. The reality is that some clients don’t always give enough thought to the next stage of their life, so the goal is to help them create a vision and a successful, manageable roadmap for their retirement. We’re very fortunate to live in a time when technology has evolved to assist us with so many things in our daily lives. That is also very true in wealth management and financial planning, given some of the phenomenal software that can help financial advisors help clients meet their retirement goals. That software, however, cannot take the place of the personal relationship between client and advisor.

A financial advisor’s greatest challenge is managing the emotional and psychological rollercoaster that affects clients when looking at their portfolios. More often than not, our job is to help clients mentally navigate these challenges to avoid making important, lasting decisions based on fear or uncertainty, which is short term in nature. Emotional hand-holding is critical, and in most cases, may be the greatest impact you have on your client. 

For most things in life you get to a successful outcome if you have a solid plan and you stick to the plan, which actually allows you flexibility when needed—able to bend but not break in the winds that affect our financial lives. The best financial advisors embrace this; they are continually reviewing and revisiting the plan they have collaboratively laid out with their clients. They recognize and work with clients around the emotional and psychological aspects of retirement and, perhaps most importantly, be a constant source of support, knowledge and education so to stay on track, even during unexpected bumps in the road.

Charles Cumello is the CEO and President of Essex Financial.

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