Are Your Clients Prepared For The Retirement They Want?
Americans are suffering from a series of “money maladies” and without treatment from a financial expert, the condition could be detrimental to most consumers who want to achieve the American Dream of enjoying a comfortable retirement.
Whats causing these ills? Market volatility? Corporate scandals? Look to human nature for the cause of why otherwise smart people think and act inconsistently when it comes to their financial well-being.
According to a Harris Interactive study commissioned by Northwestern Mutual, eight out of 10 consumers (financial decision-makers in households earning $75,000 or more) are comfortable with the amount of planning and preparation theyve done for retirement. The trouble is, they are under-prepared. Fully one-third have not yet begun to plan for their retirement. Furthermore, those polled plan to have just $15,000 a year during their post-retirement years!
The problem is that Americans are overly optimistic about their financial futures, and there is a disconnect between what people think they are doing and what they are actually doing. Consider poor money habits like dieting. People are constantly tempted to stray from doing what is best, in this case to spend or procrastinate rather than to save. Old habits are hard to break–especially over the long term.
With consumer behavior at odds with financial goals for the future, it is the financial representatives responsibility to help cure their clients “money maladies.”
This is especially important since people are living longer–Baby Boomers are the first generation able to plan on living to 85 and beyond. Furthermore, while we are living longer, we are not necessarily living better. Medical advancements and new technology may keep us around longer, but todays sedentary lifestyle and poor eating ensures that long-term care facilities and drug manufacturers will be booming.
Our increasing longevity comes at a price and will be a financial strain for many, particularly as a result of consumers lack of planning for retirement. Although recent events are forcing many to reconsider the idea, many people are retiring earlier, which means there are fewer earning years; and that combined with more post-retirement years creates potential for a money malady for most.
In the past, post-retirement consisted of maybe 10 years. Today, it is not uncommon for people to face 30-year retirements or about half of their adult life not earning a paycheck. Living longer requires innovative, ongoing planning.
Preparing Clients for a Longer Life
Financial health can be thought of in the same way as overall wellness. Each of us is responsible for 70% to 80% of how well we age, so the best investment for a healthy future is making simple lifestyle changes.