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3 Things Advisors Should Do Now to Help Clients Plan for Retirement

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Over the last several weeks, our Think Tank of CFP professionals and I have been immersed in collecting and analyzing data to determine the current state of U.S. employees’ retirement preparedness. The good news for advisors comes out of a trend we’ve been seeing since the recession: employees are continuing to put proactive focus around retirement planning. But even with this focus on planning, we found employees were dramatically unprepared for retirement. Only 14% of employees reported they were on track to replace at least 80% of their income in retirement, and at least 50% of employees across all age and income levels reported never having run a retirement projection to determine their retirement income needs.

In my last column, I wrote about the idea that approaching retirement planning in a silo has become a thing of the past. Helping clients plan for retirement through a wider lens is vital to an advisors’ ability to retain and recruit more clients in today’s economy where the ‘new normal’ (brought on by changes to government and employer-sponsored retirement benefits) means a broader scope of responsibilities for clients in funding their own retirement savings. With bleak news under these circumstances for retirees, and even younger generations wondering what they can expect to earn during their savings years, potential clients will seek out financial professionals to manage their assets that have the ability to also help them navigate and manage these changes.

Here are some best practices financial professionals can follow to incorporate non-financial factors in their approach to retirement planning in today’s environment:

  1. Help clients make life meaningful in retirement. Many pre-retirees we talk to have concerns over what they’ll be giving up that brings them fulfillment in life once they retire.  They often worry about losing friendships they’ve made, along with the satisfaction they derive from the contributions they make at work.  Advisors should be helping their clients consider how to replace that important aspect of their lives in retirement.  As part of your planning with them, ask about what they get fulfillment from. Do they have a hobby? Are they planning to join any community groups in retirement so they have some social interactions with others that share their interests? The work you do with a client who spends many hours outside of work enjoying a hobby is going to be very different than what you do with a client who gets most of their fulfillment at work. Get these clients to consider what they enjoy doing and how they might turn that into a hobby in retirement.  
  2. Help them be proactive about their health to reduce costs in retirement. Your clients have probably heard the horror stories of health issues in retirement that have drained a person’s savings, but bringing this up as an essential part of their retirement plan is an important component to ensuring they plan well now and avoid expensive health costs later on. With more employers dropping retiree health benefits (according to a PricewaterhouseCoopers study, one-third of employers with over 5,000 workers subsidize pre-65 retiree medical coverage, down from 47% in 2009) clients should not only consider increasing their savings to supplement health care costs in retirement, but they should also reduce potential health-related expenses in retirement by proactively taking care of their health issues now. Encourage your clients to make decisions about their health as part of their retirement plan.
  3. Help them navigate the available retirement benefits. Some of the most common questions we hear from employees pertain to their eligibility for government benefits and how to apply for them. Research suggests that many lack the basic knowledge about Social Security that is necessary to make informed decisions about when to retire and claim benefits (see What Do People Know About Social Security?). As Social Security and other benefits continue to change, the number of clients and potential clients who don’t understand them will most likely grow and their ability to retire will be impacted. Advisors should be including government-sponsored retirement benefits into their clients’ retirement plans, determining which they qualify for and providing advice around the best way to use them.



With more changes looming in government and employer subsidized benefits as well as changes coming for financial professionals in the form of financial regulatory reform, advisors can expect their role to greatly expand when it comes to helping clients prepare for retirement on all levels.  

Additional Retirement Resources

Following are some additional resources you can provide your clients to help them plan their retirement in today’s—and likely tomorrow’s—uncertain economy.

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