Providing The Best Financial Guidance For An Underserved Client Segment: Those Already In Retirement

by | Oct 23, 2020 | Blog

It’s that wonderful time of year again – and we don’t just mean the fall weather, beautiful foliage, and pumpkin spice lattes. October is National Financial Planning Month and that means it’s time to have dedicated check-in meetings with clients to ensure they are on track to meet their savings and retirement goals.

Many of your clients are likely taking the necessary steps to contribute to their 401(k)s, put money away for emergencies, and know what they need to retire on time. But what about those clients who are already in retirement?

This segment of the population is one that will need expert financial advice more than ever. It’s also a client segment that you should expect to grow in the near future. The Pew Research Center estimates there were more than 450,000 centenarians alive in 2015, and for that number to grow to as many as 3.6 million by the year 2050. With very few meaningful retirement age changes at the Federal policy level since social security was first established in the 1930’s, your clients need to plan for spending a larger portion of their lives on not working. Not to mention, the cost of living is always increasing, which only further intensifies this conversation.

Below are three high level areas of focus to work with your post-retirement clients on during the month of October.


Setting The Right Age For Retirement

When social security was created, Federal policy established age 65 as the time when a citizen could begin to draw from the system. However, life expectancy in the 1930’s was on average below the retirement age – 58 for men and 62 for women. Many never expected to live long, or at all, during their golden years. But thanks to advancements in medicine and the success of the U.S. economy in providing greater opportunity at all levels of income, life expectancy is now in the late 70’s for most people.

While this is great news, Federal policy has not kept up with longevity; retirement age has been extended only to 67 for those born after 1960. While these numbers are for social security benefits specifically, they serve as a cultural guideline of when to retire as well. With an average retirement age of just 61 (according to Gallup), many people simply plan to stop working when they can begin collecting social security and Medicare benefits.

Make sure your clients are thinking about a target date (or age) for retirement that fits their unique needs and capabilities. Work with them to plan for what they want to do in retirement and what they’ll need when they get there. Income level and amount saved over a lifetime matter greatly. Make sure your clients are eyeing a time for retirement that is not based on external factors but is based on them and their needs.


Be Honest About Life Expectations

These conversations can be hard, but as their financial advisor, your clients are looking for advice about how to stretch their assets to maximize their lifestyles. You can’t have this conversation without taking into account quality of health.

Keep in mind that of those who turn 65 this year, about half will make it to their 85th birthday. While it’s impossible to predict how long we will actually live, there are some activities and lifestyles that can lead to greater longevity than others. Be sensitive with these conversations but honest with your clients about their bill of health. If you have a client that is in good health, generally speaking, make sure they are budgeting for several decades living on retirement savings and social security benefits.

Give all clients the same sage advice but be real about health and remember to look past the numbers.


Know The Tools At Your Disposal

As you are aware, client needs change completely once they’ve reached the Holy Grail of retirement. This is what they have been saving for, now they need to know how to spend the money earned from all those years.

There are certain strategies that could be effective depending on a client’s age. For example, immediate fixed annuities allow folks to essentially buy access to regular monthly payments. If a client does this at age 60 and lives to be 100, they are buying themselves a very strong income stream. Additionally, there are certain Federal mandates that require IRA distributions once clients have hit a certain age – required minimum distributions. Make sure they plan on this income stream and know what to expect.

These are just some of the many considerations for working with clients who have already started their retirement journey. As we kick off Financial Planning Month once again, use this time to work with those who may need your advice more than ever.

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