Practical Advisory Steps for Clients Entering Retirement

What does your past experience with clients tell you when they experience more confusion and anxiety about their finances than any other time in their lives? Most of you will probably immediately think of what we call “The Retirement Transition Phase.” This is when clients have reached a point when they want to retire or must retire in the near future. “Retirement” is actually not a very precise term. What we are referring to here is a time when an individual or couple has reached a point where they want to have, or must have, adequate resources to provide income that lasts as long as they do. They probably want to work less or not at all, or may be unable to work full time or even part time.

Most financial practitioners will want to be ready to provide meaningful and efficient financial services to these clients and prospects because, at this point in their lives, people are probably more motivated to get their “financial house” in order than at any other time. Below we have listed a checklist of key planning issues that you will want to be ready to address with people who seek advice from you at this critical time:

  1. Help clients attain realistic clarity about their financial goals.Help them get very specific and acquire enough information to quantify their wants and needs. Understand their emotional drivers.
  2. Help clients understand the full extent and flexibility of the current and future financial resources.People particularly struggle with employer-sponsored benefits, continuation of health care coverage, and Social Security benefits. Don’t forget about potential inheritances.
  3. Do not let clients expose themselves to unexpected events that can destroy their financial security.This includes all typical property and casualty coverage, but the accessibility to medical health insurance changes at older ages and the potential for needing long-term care services increases significantly. Death is not scheduled, thus estate planning should be addressed to make sure that assets will be distributed as desired and as efficiently as possible. Clients will want to make sure that dependents and/or surviving spouses are provided sufficient financial resources.
  4. Virtually all clients need help with retirement income planning.This can be an overwhelming technical issue for almost everybody. “How exactly do I maximize my after-tax income and be sure that it will last as long as I/we live?” This, and a few other questions, must be addressed with comprehensive planning:

    Do I/we have sufficient resources to attain our retirement goals?
    Do I/we need to continue working? How much and how long?
    When should I/we begin drawing Social Security retirement benefits?
    Which pension option should I/we select?
    Should I/we purchase immediate annuities?
    Should we draw money first from our deferred assets or personally owned assets?
    Etc., etc.

  5. Re-evaluate asset allocation.Assets allocated for growth, probably in a period of a higher income tax bracket, must now be shifted to support a strategy of providing a dependable income for the remainder of the client’s life/lives. This not only involves logistical shifts and changes, but also requires that the financial professional help the client understand that their portfolio strategy and asset allocation must be altered to assure the dependability of lifetime income.

Clients in the Transition Phase offer tremendous opportunity to financial professionals who have prepared themselves to provide effective services for their specialized needs.

“For those who wish to learn more about critical issues in retirement planning, check out Greene Consulting’s Retirement Planning Program.” Click here to learn more. 

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