Improving The Retirement Bottom Line

For clients nearing or at retirement, advisors can suggest ways to improve the retirement bottom line, thus making income planning more feasible. This strategy is aimed to help clients reduce expenses in a way that will not reduce quality of life. Following are three steps to do this.

Reevaluate everything. How many personal expenses are there by force of habit? Before retirement, many people pay for services they are too busy to do for themselves. They drive through coffee shops or fast-food restaurants, instead of preparing coffee or sandwiches at home. They have house cleaning and lawn services.

Some people continue these services even though they now have the time to do them themselves. If budget is a concern, an advisor can now remind them that “time is money.” For instance, ask: Why continue to pay 2 to 3 times the cost of a cup of coffee for specialty coffees bought in shops? Or: Why pay a few hundred dollars a month for housecleaning, if 10-12 hours of one’s time would produce the same result?

Even those who have already cut back can find unnecessary hidden costs by evaluating every expense. For example, a client may talk almost exclusively on their cell phone and yet still own a land line. If they need a land line, ask whether they need it when they are away for several months. If not, then remind the client that phone companies often allow people to discontinue service for specified periods at a reduced monthly rate and without losing the existing phone number.

What about premium cable channels that cost tens of dollars a month? Ask: Is anybody watching them? If yes, ask whether the movies or programs could be obtained elsewhere, such as a library or a rental program. And point out that cable service can often be discontinued, just like the phone, if the person is away for a few months at a time.

Even smaller expenses are worth examining. Suggest that clients review all products used in the home or by the family to see which ones are worth continuing and which ones are not. For example, do they really need several different products to clean the kitchen, or would one or two do? What about personal care products? Does it really take shampoo, conditioner, volumizing lotion, hair gel, and hairspray to create the perfect hairstyle? Perhaps not.

Pay less. Almost all items and services can be found for less. Encourage clients to take advantage of every possible discount.