You are probably reading this on a Friday afternoon, with weekend plans crowding your mind. What needs to be done around the house? Do I have time to visit a friend for lunch? What do I need at the grocery store? Your clients are probably doing the same. With so many short-term plans to be made, it’s sometimes easy to overlook our long-range goals, like how will I fund my retirement?
So you, and your clients, probably didn’t know that this week was National Retirement Planning Week, did you? The event was sponsored by the Insured Retirement Institute (IRI) and a group of financial industry and advocacy groups to promote awareness of funding a secure lifestyle when our working days end.
I listened in on a conference call to kick off the event on Monday. The statistics were pretty sobering: 62 percent of baby boomers believe their financial situation over the next five years will be either the same or worse and 70 percent of middle-income boomers say they will not have enough money to make ends meet when they retire. And fewer than half of boomers have consulted a financial professional. The situation is worse for women as they enter their retirement years.
Further, more than half of workers have yet to calculate how much money they need to live comfortably in retirement, said Nevin Adams, co-director for the Center for Research on Retirement Income, Employee Benefit Research Institute. What’s more, the percentage of workers who report they plan to retire after age 65 has increased to 37 percent this year, from just 11 percent in 1991. “Yet half of the retirees we surveyed this past year report having to leave the workforce unexpectedly due to health reasons or downsizing or closure” of their workplace, Adams noted.
Yet if the general public needs to be educated on retirement planning, maybe advisors do as well. One of the speakers on the call, Katie Libbe, vice president of consumer marketing and solutions for Allianz Life, said advisors are “extremely hungry” for knowledge about how to map out a retirement income plan for retirees and pre-retirees. Advisors are well versed in helping their clients build their assets in the accumulation phase of their financial lives, but may lack the knowledge about how to handle the distribution of those assets when clients are in or near retirement. “Do you take a bucket strategy? Do you build a floor? How do you sequence out the distributions? Do you start with non-qualified or qualified money? Do you keep the Roth until the end for legacy planning for heirs?” Libbe said. “It is actually so much more complicated than just building a portfolio.”