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Retirement Planning > Retirement Investing

Opportunities Abound In The Post-Retirement Planning Market

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Opportunities Abound In The Post-Retirement Planning Market


Post-retirement planning does not seem to get the same level of attention as pre-retirement planning. Perhaps its because the financial professional views the tools necessary to work in this market as too different, or because the need for planning is considered less urgent in the later years.

Given the increasing longevity of our population, however, and the acknowledgement that total return and equity participation are still very important in the later years, there are numerous opportunities to provide a valuable service to retired individuals–and get paid for your efforts.

Planning needs in retirement are actually very similar to pre-retirement needs. For example, it becomes even more important for seniors to be sure they have a properly drafted will, which reflects their current situation and evolving tax laws. Dying without a will can force some very awkward property distributions, depending upon state intestacy laws.

Likewise, retired individuals need to be sure they have a durable power of attorney, health care power and living will, just like the rest of us.

Beneficiary designations for 401(k)s, IRAs, pension plans, deferred compensation, annuities and life insurance should be carefully reviewed on a regular basis to be sure they reflect the clients current situation and desires. They also need to be coordinated with any other planning tools the client has in place.

Trusts are often created in the post-retirement years, to benefit grandchildren (dynasty trust); disabled children, siblings, grandchildren or parents (special needs trust); to encourage and reward responsible behavior by family members (family incentive trust); or to protect assets (asset protection or spendthrift trust).

Remember that the retired grantor(s) need not be the insured(s) if life insurance is used to fund any of these trusts. The younger, and perhaps more healthy, children can be insured for the benefit of the grandchildren.

Section 529 plans present an excellent opportunity for estate planning by a retired couple. Large amounts of assets can be moved out of the estate, yet still remain accessible to the retirees in the event of a financial emergency.

Charitable giving often becomes more urgent or attractive in later years, as clients have the discretionary assets to support their favorite organizations. Planning techniques such as charitable remainder trusts and charitable gift annuities are excellent planning tools for the retirement years.

Uniform Transfers to Minors Act (UTMA) and Uniform Gifts to Minors Act (UGMA) accounts are still very viable options for providing for grandchildren, and often their benefits can be enhanced through the leverage and tax advantages of life insurance. Simplicity of implementation makes these techniques some of the first tools you should consider.

Long term care takes on new meaning upon entering retirement. At this point, clients are much more willing to consider their own morbidity, particularly after earned income drops. Addressing this opportunity early in retirement, when insurability is less of an issue, makes good planning sense.

Many of the largest life insurance sales are made as retirees begin their “end game” planning. They become much more aware of estate, capital gains and income tax shrinkage of assets before they pass to the next generation. Estate planning is all about asset preservation, and life insurance can play a key role in this area.

The same is true of annuity sales, where having sufficient retirement income for life becomes a more immediate concern. Tax-deferred growth, tax-advantaged distributions and an income the client cannot outlive continue to make annuities an effective tool in retirement.

Investments also need to be reviewed at this point. Particularly in a low interest rate environment, no longer are most clients content to convert their assets to low-yielding fixed instruments. Equities and professional money management become key considerations, both for economic reasons and with the emergence of the prudent investor standard that focuses on total return.

So, for those planners who think the end of the working life signals the end of active planning needs and potential sales opportunities, take a closer look at the post-retirement market. Retirees need continued planning–it can be a very lucrative market.

, JD, CFP, CLU, ChFC, CFS, FLMI, is vice president, advanced sales-case design and support at Jefferson-Pilot Financial, Greensboro, N.C. He can be reached via e-mail at [email protected].

Reproduced from National Underwriter Life & Health/Financial Services Edition, August 4, 2003. Copyright 2003 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.


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