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Retirement Planning > Retirement Investing

The place where guidance and retirement meet

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You client has called you and said they are thinking about retiring, they have seen articles in the newspaper with retirement tips and a friend of theirs suggested some web sites to look at, now they want your input. Their concerns are common so the question is what is your suggestion for them, what guidance will you give them that does not involved a product or carrier. Guidance that is designed to help them evaluate the timing of their retirement as well as the long term effects of their planning on their income, assets, health and impact on their loved ones.

First keep in mind that your client will do three things, almost without exception when they are retiring at Social Security full retirement age;

  1. Social Security – they will sign up for Social Security. Many people have questions about how retirement works; you can refer them to web site to learn how Social Security works and view some informative short videos.
  2. Medicare – when they sign up for Social Security they will automatically be enrolled in Medicare, in fact if they are going to continue to work for a period of time they will have to opt out of Medicare Part B
  3. Supplemental Health Plan – some 80% of individuals will purchase some type of supplemental health plan to cover the co-pays and deductibles and/or medical expenses that Medicare does not cover. They will purchase either a Medicare Advantage or Medicare Supplement if not some state specific version of these.
  4. Final Expense – many will purchase a life insurance policy to either cover the cost of final expense or replace the first year income lost by a spouse passing in later years. Why will they do this, so they don’t leave a financial burden on their family
  5. Short/Long Term Care – many will purchase a plan to help pay for expenses not covered by Medicare or other health insurance to help cover expenses when they are recovering at home after a procedure.

Here are some suggestions to start the conversation that might be useful for them and you.

Comments and/or questions for your clients –

Estimate Retirement Income

“When you estimate your own expenses in retirement, remember that some of your expenses will decrease.  For example, you won’t have to pay Social Security taxes on income if you’re retiring at full Social Security, or work-related expenses. However, other expenses – prescription drugs, long-term care insurance, and others – may go up considerably.


Nearly 85 percent of older married women outlive their husbands. A husband’s pension is often reduced by half after he dies, and if the couple receives two Social Security benefits, the lower benefit is eliminated.

Life Expectancy

According to data compiled by the Social Security Administration:

  • A man reaching age 65 today can expect to live, on average, until age 84.
  • A woman turning age 65 today can expect to live, on average, until age 86.

And those are just averages. About one out of every four 65-year-olds today will live past age 90, and one out of 10 will live past age 95.


Inflation has fluctuated since 1970s between 7% down to 3% in 1990s, CD’s or money market funds have not kept up while many use them to hold emergency funds while the stock market has offered higher returns for long term investments. And while this many mean the possibility of greater gain the higher risk of loss has to be accounted for.  So what vehicles or investments can help our clients protect against inflation;

  1. Social Security – while not always usually Social Security increases slightly each year through a Cost-of-Living Adjustment (COLA), for 2014 the COLA is 1.5 % for most
  2. Inflation-indexed Treasury bonds – The principal of a TIPS increases with inflation and decreases with deflation, as measured by the Consumer Price Index. When a TIPS matures, you are paid the adjusted principal or original principal, whichever is greater. TIPS pay interest twice a year, at a fixed rate. The rate is applied to the adjusted principal; so, like the principal, interest payments rise with inflation and fall with deflation.
  3. Inflation-indexed annuities – An inflation-indexed immediate annuity is a form of a fixed annuity. You receive a guaranteed stream of income from the insurance company, and that income will rise each year based a pre-determined formula; usually the increase is tied to changes in the CPI (Consumer Price Index). An inflation-indexed annuity will provide a lower initial amount of monthly income than a non—inflation-indexed immediate annuity, but over time, as inflation continues, the monthly income will gradually increase, surpassing the amount you would be receiving from an equivalent non-indexed annuity.

So what does it mean to plan for retirement – Your clients will have retirement expenses not covered by monthly pension and social security benefits. They will need to consider the issue of not outliving their means. While some will be tempted or want their money to go to their heirs it’s important they understand that the money in their retirement vehicle is for retirement and not for heirs

  Are there any final tips on talking to your clients about the issue of Retirement?

Set aside money for uninsured expenses

As your client ages you don’t have time or resources to replace losses or mistakes

RMD – 70 ½ – Required Minimum Distributions (RMDs) generally are minimum amounts that a retirement plan account owner must withdraw annually starting with the year that he or she reaches 70 ½ years of age or, if later, the year in which he or she retires. However, if the retirement plan account is an IRA or the account owner is a 5% owner of the business sponsoring the retirement plan, the RMDs must begin once the account holder is age 70 ½, regardless of whether he or she is retired.

Lastly remember the old adage- The best laid plans can and do go wrong, so here are some practical ideas your clients can do in addition to following your council;

√ Income does not cover your expenses – look at lifestyle issues, live on your income

√ Stay on job for a longer period of time – now may not be the time to retire, especially if your income will be less on Social Security than while working

√ Part-time job – once retired they can always work a part time job, keeps them social, fills the day and brings “spending” money in so what use to be staples does not become a luxury

√ Manage expenses and priority – consider moving to a smaller house, lower cost area

√ Reverse mortgage

You are a highly trained licensed professional, your council and advise is important for your clients and it matters. Think of how you look at council and advice from a professional in your life for things that matter. You are filling sick, you go to the doctor and here is what happens;

Doctor A – you go to doctor A, you describe how you feel, the doctor exams you and says he knows what the problem is, he says you can have this medication, this medication, this medication or this medication

Doctor B – you go to doctor B, you describe how you feel, the doctor exams you and says he knows what the problem is, he writes you a prescription and says fill it, take two pills a day and come back in 10 days

Here’s the question, which doctor do you have more confidence in – Doctor A or Doctor B?

Most people answer Doctor B, you know why?

Because he diagnosis the problem and prescribed the solution. He was professional, knowledgeable and there was nothing in his behavior that indicated you would do anything but follow his advice. His words and behavior were congruent and that gave you confidence.

Be Doctor B in your practice and your clients will follow your advice.


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