Some of the greatest minds in human history have sought to answer some of the most intriguing questions in history. Some of those questions have been answered: How fast does light travel? Is the moon really made of Swiss cheese? Who shot J.R.? Others haven’t been: Why are we here? Was there ever life on Mars? Who put the bop in the bop she bop she bop? Where’s Waldo?
To that litany of great questions of our time, add this: What’s a senior? How does one who calls himself a senior advisor define that market? It’s a tough question to answer, especially given the wide range of definitions available.
The U.S. Census Bureau uses age 65 to determine senior status. AARP uses age 50 as a threshold for membership. For many years, age 62 was considered retirement age and, therefore, the age at which one acquired senior status. MetLife conducted a national poll to find out what Americans consider old. A plurality, 32.3 percent, said 71-80 is old. But 14 percent of those in the 18-29 age group thought 41-50 was old; nobody older than 65 thought 41-50 was old.
Things really get hairy when the Webster’s Unabridged Dictionary definition of senior citizen is parsed: an elderly or aged person, especially one who is retired or whose principal source of support is a pension or Social Security benefits. A quick look at the definition for elderly reveals this: somewhat old; near old age. Not much help. The definition of aged doesn’t help either. The people at Webster aren’t going to put a number on old or aged or elderly. The last part of the definition will really give a senior advisor pause: one whose principal source of support is a pension or Social Security benefits. As pensions increasingly go the way of record players and Social Security becomes less and less reliable, there – by definition – won’t be any seniors or senior citizens.
The realization many advisors have come to is that seniors, especially those in the coming baby boomer wave, won’t be defined by a number. Being a senior is more a state of mind or an accumulation of characteristics. It also can be a state of financial readiness for retirement, and that’s the state senior advisors like to see because they can work with someone who has achieved that level.
Mind over matter
Ann Vanderslice says being a senior has nothing to do with an age. She says it’s a state of mind. John Peplowski agrees. He has been in the senior market since 1975 and he says, “Seniors are not seniors like they used to be 20 or 30 years ago. People don’t think of themselves as seniors.” He attributes that fact to the longer life spans we see today.
Vanderslice, an independent advisor with her own Denver-based practice, works with many federal retirees, who tend to retire in the 55-60 age range. She says she sees her clients achieve senior status eight to 10 years after they retire.
“None of them have considered themselves seniors when they retired,” she says. “Those are the go-go years right after retirement. Then, later, they slow down. That seems to be when they become seniors, in their mid-retirement years.”
The senior market traditionally has been 62, Vanderslice acknowledges, but she thinks it is a function of how long people have been retired, which moves the senior tag back closer to 70. That makes the assumption that everyone is going to retire at a traditional age.
Peplowski, president of the Retirement Specialist Golden Years Financial & Insurance Services in Sacramento, Calif., sums up what many leading-edge boomers (who fit some definitions of senior) may feel. We were talking about what the definition of a senior is and he indicated he planned to work his whole life, never retiring. I asked him if he would avoid the senior label by doing so. His response, which gives serious weight to the argument that being a senior is more a state of mind than a number: “That may be what I’m trying to do.”
Vanderslice has a way of dealing with the people who don’t take kindly to the senior tag. She frames everything as a conversation about what happens 10 to 12 years into retirement, not about what clients want to do in their senior years. That strategy fits nicely into the “state of retirement planning readiness” definition of what it means to be a senior.
Ready, aim, retire
A person who has given a lot of thought to retirement and has started planning for it may not be a senior, but given the right circumstances, he’s a person a senior advisor can work with. Heck, people in their 50s and 60s sometimes aren’t as well-versed in retirement planning as people in the 40s. That’s why Al Landolph, an independent practice owner in Los Angeles, says he markets to people as young as their 40s.
“It’s a planning state of mind,” Landolph says. “There are people in their 40s who have that mentality.”
On the other side of the equation, Landolph says he works with a couple of CEOs in their 70s and one in his 80s, all of whom are still working. They have the mentality that they’re not old yet, so they’re not seniors, but they’re actively planning for when or if they retire.
Peplowski sees the readiness aspect as one that is a good gauge of who senior advisors can work with. Even if neither the advisor nor the prospect considers himself a senior, the indication he’s ready to retire in four or five or six years is likely more important than age.
“In my practice, we’re dealing with pre-retirees or retirees,” Peplowski says. “Age-wise, I’m looking at 55 and up as what I call a senior. But it’s because they’re ready to retire [not because I consider 55 old].”
That state of readiness is something advisors need to keep in mind as they search for new clients. A 52-year-old who has quite a large nest egg set aside in mutual funds and IRAs may want to lock up some of his retirement assets in a fixed annuity or an indexed annuity that can grow for a couple of decades before he needs to touch it. And the best place to seek out those kinds of clients is through current clients who have adult children coming to the end of a career. Peplowski says that is how he acquires most of his younger clients – through their parents.
Another way to define senior beyond age is through traits that are acquired via the aging process.
“The term senior is better defined by the characteristics one exhibits than by age,” says Dan Danbom, the director of communications for the Society of Certified Senior Advisors in Denver.
Danbom says the Society tends to think of senior as 65 because that is the gerontological view, but SCSA teaches advisors to take into account clients’ health, financial needs and social needs. Those are the characteristics that can determine senior status, no matter one’s age. On the health front, the things that affect seniors are loss of eyesight and hearing, driving restrictions, chronic conditions and much more. Financially, seniors are more sensitive to their financial futures and are concerned about outliving their assets. Socially, they want to be able to see friends regularly.
Modern medicine may be able to put off some of the effects of aging until later in life, but with that extended life span comes increased anxiety over outliving assets, so advisors are dealing with a Catch-22: people are staying healthy and living longer, but they’re trying to do it without enough money in many cases.
“It’s a hard concept to get your mind around,” Danbom says. “Financial advisors need to learn about their audience and what is important on their terms. What about getting older is important? They should want to understand more about seniors if they are going to market to them.”
Finding a definition for “senior” may be as difficult as finding the definition of pornography was for Supreme Court Justice Potter Stewart. He famously said, “I’ll know it when I see it.” That may be the case for many financial advisors, too. They’ll know a senior when they see one, either through the person’s attitude about retirement planning or because of the specific product or service the person is looking for.
Someone looking for the safety and security of a fixed annuity won’t go to a fee-only securities broker. He’ll look for a senior specialist, someone who understands the importance of safety. And the senior specialist is looking for someone who needs the safety of fixed income products, whether that person is 50, 55 or 80.
The important aspect of any definition of senior, at least for senior advisors, is that it includes something about retirement. People need to be in retirement or close to it. As boomers near the magic time of retirement, senior advisors can help them, even if – in the words of Dan Danbom – “they’ll be dragged to accept the [senior] label kicking and screaming.”
So don’t fret. Whether professionals specialize in annuities or long term care insurance, or they offer the full spectrum of services, people of a certain age will always need what senior advisors offer, whether they call themselves seniors or not – and whether or not, by definition, they have pensions and Social Security to rely on.