How To Help Clients Plan For A Successful Retirement

When thinking about retirement, I often find myself reflecting on my father’s experience of retirement. He, like countless others of the Silent Generation, had personal savings, a pension and Social Security: the trifecta of retirement savings. He and my mom were set up for success and the fear of them outliving their money was minimal.   

Those of us who are now in our 40s, 50s and early 60s are looking forward to that next phase of life, but unfortunately, retirement savings may not seem as reliable as they once were. Pensions are all but a foreign term today, and Social Security may not be as rock solid as we once thought. Pair that with rising inflation driving up the costs of housing, healthcare and long-term care, it seems that the stress of saving for retirement is only being amplified. In addition, life expectancy is greater than ever before, which also means we will be spending more money in retirement and the fear of running out of money may be greater.   

Now is the time for financial professionals to step in and ease clients’ worries. When working with your clients to plan for a successful retirement, consider the following questions:

1. What is the next phase of life going to look like for your clients? When discussing retirement with your clients, ask them to start thinking about their priorities and expectations for their futures. For example, some may be hoping to continue working in some capacity, while others will prioritize upsizing or downsizing their homes, and some may be focused on becoming more socially and physically active. These ideas are all important to understand in order to help your clients achieve their goals for retirement. But how can you identify these goals?  

Start with the following questions: 1) Where do you plan on living in retirement? 2) What do you plan on doing? 3) With whom do you plan on spending your time? These are three basic but essential questions that can help both you and your clients start envisioning what that next phase entails. Begin organizing regular meetings with your clients to tackle each of these questions and put plans in place for the future they are picturing for themselves and likely for their families. Everyone’s view of retirement is different but asking the right questions can start to bring clarity to that image.

2. Are your clients doing all they can to save? To prepare for the future, your clients should take advantage of all the savings opportunities being offered to them now. This can be overwhelming, so it’s important as a financial professional to bring different options to your clients’ attention, such as retirement plans at work, catch-up provisions, IRAs and Roth IRAs, to name a few.

Laying out these selections for clients is an essential first step. The next move is to take inventory of their current assets and start to develop a distribution plan. It will be beneficial for your clients to have a well-diversified portfolio—with diversification not only from an investment perspective, but also from a tax perspective. A portfolio compiled of taxable, tax-deferred and tax-free investments can help your clients’ assets last longer. An effective distribution strategy can be developed by asking when your clients hope to retire. Explain that a taxable account could make sense for someone who will be needing some of their savings more immediately, whereas a tax-free account might be a better option for someone who has a longer time horizon. Help your clients understand that diversification is a long-term approach, and by taking action now, they can set themselves up for a successful retirement.

3. Do you understand your role as a longevity-based financial professional? Your business card may not change, but your role as a financial professional should always be evolving. These days, your clients are going to need more. Your job, of course, is to help your clients manage the financial aspects of retirement. However, a good financial professional will also guide clients through the non-financial aspects of retirement.

You can better assist your clients by building relationships with other professionals who play a key role in the retirement phase of life—particularly focusing on the areas in which you may not necessarily be an expert. You may already work with tax and legal professionals as they are critically important to your clients’ financial planning. Think outside the box and make a list of other teams that will help your clients answer the three questions mentioned above. This list can include builders, realtors, caregivers and social workers. Ultimately, bringing together a stronger, diversified team will help your clients better navigate the aging process and achieve a successful retirement.

Retirement these days may not look like our parents’ or grandparents’ retirement, and your clients may feel like the responsibility to successfully plan and save is solely on them. As financial professionals, it’s our job to remind clients that they are not alone. Remind them that you are their partner who understands the changing view of retirement. We are living longer, healthier lives than previous generations, and a financial professional who is focused on longevity can help clients make the most of this exciting next phase of life.

Mike Lynch is managing director of applied insights at Hartford Funds.