Are Your Clients Prepared For The Retirement They Want?

For example, if we want to be healthy and enjoy the retirement years–say driving a Harley-Davidson rather than a wheelchair–we should exercise moderately throughout our life, rather than starting to run two miles each day when we are 75. The same holds true for retirement and post-retirement planning. If we wait to make reparations a few years before, it may be too little, too late.

The first step is to determine how long clients may need to save and address their particular money behavior. A longevity calculator can be a great way to illustrate the relationship between lifestyle choices and longevity to clients, and can set the framework for a discussion about a comprehensive plan that takes a longer number of retirement years into account.

Overcoming the Longevity Challenge

Often people neglect to think about all of the planning that will be involved to sustain their lifestyle after the day they retire. And, of course, there is a sizable portion of the population that has done little to prepare for retirement at all. The key is really to start planning as early as possible, but there are a few tools we can use to help clients catch up.

One highly publicized consideration is long-term care insurance. Today, consumers are getting mixed messages about when they should buy, or if at all. As we know, middle-class Americans have the greatest need for LTC insurance and in many cases are being told they should at least wait until after age 60.

If clients have the financial means, it certainly makes more sense to purchase LTC when the premiums are low and while they still have the option. If they wait until their 70s, their health could be compromised and they may miss this financial safety net. LTC is really lifestyle protection that can offer elderly people the freedom to stay in their home longer and it also removes some of the burden from family caretakers.

Annuities are also becoming increasingly popular as our graying population refocuses their attention from accumulation to post-retirement planning. The guaranteed stream of income is attractive for many, but as an industry we need to improve education and the quality of information provided to clients to make annuities easier to understand.

On that note, helping clients navigate through the estate planning maze is an opportunity for financial representatives. Only a third of Americans have a plan in place, and changes to the estate tax laws have only heightened confusion. There are many ways to reduce the amount of assets in a taxable estate, and an option that should not be overlooked is leveraging the annual exclusion through gifts of life insurance. Its a relatively simple solution to a potentially complex tax issue.

There are a few quick fixes you can offer for clients who have not yet started planning. The Economic Growth and Tax Relief Reconciliation Act has several provisions to help clients increase the amount they are eligible to save for retirement. Be sure those over 50 are taking advantage of the “catch-up” provisions. Generally they can make additional contributions to certain retirement programs over the usual limits on IRAs, 401(k)s and similar pension plans.

Secure finances, along with overall health, helps clients to age well and have a better quality of life. Preparing clients for post retirement ensures that they will enjoy their golden years, having peace of mind knowing they have a solid plan in place for whatever may come.

, CPA, PFS, CFP, CLU, ChFC, is a vice president at Northwestern Mutual in Milwaukee, Wis. She can be reached via e-mail at merideemaynard

Reproduced from National Underwriter Life & Health/Financial Services Edition, August 5, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.