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Retirement Planning > Retirement Investing

A Retirement Plan That Makes Sense

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With an increasing number of baby boomers taking on the responsibilities of caring for aging parents and adult children simultaneously, many are faced with delaying their retirement. Unfortunately, many clients who have retirement plans in place starting at age 65 will be hard-pressed to find their finances stable enough for such early retirement. As victims of the many different facets of the “sandwich generation,” many boomers are inevitably sacrificing a portion of their golden years to care for their loved ones in need of financial aid.

The sandwich generation not only refers to boomers caring for elderly parents and adult children, but also those who care for their adult children and grandchildren concurrently. This situation is caused by a multitude of factors, such as unexpected unemployment or divorce, and it is typically not factored in to a retirement plan. In order to help clients who are juggling these responsibilities, we must explore innovative and creative options.

Develop a timeframe

To adequately plan a timeframe for your boomer client, you must first determine how much income they need to meet their regular monthly expenses. Next, compare it to the amount they need in order to cover the expenses that result from their caregiving role. Encouraging clients to give their stakeholders (i.e. their children) boundaries is one way to decrease the amount of change they must make to their current lifestyle. Reassure them that discussing a new budget with their children will give all parties involved a clearer understanding of their financial situation. Also, remind your clients that if their retirement savings deplete quicker than anticipated, it is much more likely they will one day, in turn, depend on their children for help.

Become a stop-gap

Using this tactic allows my clients to use me as a “stop-gap,” which ultimately means I serve as a buffer between my client and the family members they are financially supporting. For example, if one of their children asks to borrow money, my client can say, “I first need to speak with my financial advisor,” rather than feeling pressure to distribute their money immediately. Many parents feel a strong need to provide for their children and have a hard time saying no. This method allows them to have more time to evaluate and understand each financial decision they choose to make on behalf of themselves and those who depend on them.

Ultimately, when a client’s family member is experiencing a financial crisis, their first inclination is to step in and help, even if it means sacrificing monetary assets of their own. This is especially true between parents and children. Parents want to give their children “roots” and “wings” — roots to ensure they will always have a place to call home, and wings to enable flight to chase their dreams, leading them to success. It is our job as advisors to allow our clients to do this without destroying their retirement nest egg.

Our value lies in our ability to understand the market and help our clients implement the most suitable strategy. Our job is not to decide what is important to our clients and persuade them into only what we think is best, but to work together with them in order to develop a comprehensive retirement plan that makes the most sense for them.

For more on retirement, see:

Caught in the Club-Sandwich Generation

Protecting Baby Boomers from Themselves

5 Ways to Connect with Boomer Clients


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