For prospectors in the financial services industry, the baby boomer market may be something akin to the “Yukon Gold Rush,” contends Ken Dychtwald, a Ph.D. who has studied and written about aging. But without the right customer relations skills, the gold pan may come up empty, he cautions.
Dychtwald consulted on a recent survey on the senior market put out by SunAmerica, Inc., a Los Angeles unit of American International Group.
In his own experience, he says, no one who has sold financial products to him in the past has called him during the market downturn of the last two years. This is not the kind of skill that he thinks financial advisors should employ.
But even if advisors do regularly communicate with clients who are seniors, they better not have a one approach fits all way of reaching out to clients.
“The notion youll reach a point in your 60s where you will cease working is dead. Its been dead for a few years,” he explains.
Diversity in the senior population is something the SunAmerica survey examines. It sorts seniors into four categories: ageless explorers; comfortably contents; live for todays; and sick and tireds. The survey says these four groups represent personality types that respectively: seek new challenges; seek to live an enjoyable traditional retirement; want to seek new challenges, but have lived for the moment at the expense of their retirement plans; and, are not financially prepared for retirement.
Jay Weintrob, AIG SunAmerica president and CEO, notes the correlation between satisfaction and preparation for retirement.
“Are Americans realistic? Probably, the answer is no,” says Weintrob.
They are saving, but they are not saving enough, he adds. There is a general view that someone else will take care of them, but that is an “uninformed view,” Weintrob continues. “Very few people, in a disciplined way, work with a financial advisor.”
In April, Americans saved $218.7 billion or a 2.8% rate compared with $233.6 billion or 3% in March 2002, according to the Bureau of Economic Analysis of the U.S. Department of Commerce.
Regardless of income, if an individual is not saving for retirement, then there is going to be a problem in retirement, says Mike Crifasi, a certified financial planner with CEI Financial Planning in Atlanta.
“It is tough to make it up after you reach the age of 62,” Crifasi says. One reason, he explains, is that taxes and reduced benefits are imposed on income for those who receive Social Security.
That is wrong, according to Crifasi, and it is something he says has moved him to run for a seat in the Georgia legislature this fall.
Because of taxes and reductions in benefits, “there are lots of elderly people who drop out of the work force,” he adds.
On the issue of reduced benefits, the Social Security Administration offers guidance. It says that if an individual is under full retirement age and receiving benefits, the system deducts $1 in benefits for every $2 earned above the $11,280 limit. In the year of retirement, currently age 65, $1 in benefits will be deducted for every $3 earned above a $30,000 limit before the individual turns 65. After age 65, there is no limit on earnings. The full retirement age is 67 for those born in 1960 or later.
Time, however, can help offset Americans tendency to sprend rather than save.