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Retirement Planning > Saving for Retirement

The advisor’s guide to “talking boomer”

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While many advisors are members of the baby boomer generation, it can be difficult at times to understand the mindset of this post-World War II American demographic.

To a boomer, for instance, it might actually matter whether or not Pete Rose gets into the baseball Hall of Fame. Boomers may have had a childhood that was shaped by the success of the 1950s, the unrest of the 1960s and 1970s, and the constant uncertainty associated with the Cold War. They watched “American Bandstand,” “The Partridge Family,” “MASH,” and shows such as “Thirtysomething” that mirrored the baby boomers’ journey and their struggles as they prepared themselves for middle age.

Yet an advisor needs to know much more than just whether a boomer preferred the Beatles or the Rolling Stones. An advisor needs to know what forces shaped the thinking and behaviors of a generation, especially when it comes to financial planning.

The boomers were parented by people who lived through the Great Depression, and they have lived through the Great Recession. It is a group that came of age when almost every company had a pension plan and you could actually pay some college tuition with the proceeds from a summer job.

It is a generation about to account for the greatest transfer of wealth in human history — and yet a generation questioning whether they have enough money to retire and live a life that could be extended by decades.

They worry about being able to do the things they planned on doing in retirement and they worry about being able to pay the bills. In essence, they need to know if they will have enough net spendable income the day after they retire.

In a 2014 research study conducted by Lincoln Financial Group, “Measuring Optimism, Outlook and Direction (M.O.O.D.) of America,” consumers identified areas of financial concern. Fifty one percent of respondents identified taxes and the impact on their retirement savings as their main concern. That was followed closely by worries about inflation, long-term health costs and longevity, or outliving their money.

The problem is many baby boomers are not facing up to the reality of retirement. For example, according to the American Council of Life Insurers (ACLI), 7 out of 10 boomers retiring today will require some kind of extended nursing home care during their retirement.

The cost of health care has long outpaced inflation, making it hard to plan for health costs. An unexpected health event can have a dramatic impact on a client’s portfolio.

Like most Americans, boomers may not have a plan on how to pay for long-term care expenses, a fact that can often be attributed to their experience watching a parent die peacefully, if too early, at home.

They may also be convinced that they fall into the 30 percent of Americans who don’t end up needing long-term care. They know too well that if they invest in a traditional long-term care insurance policy, then something else might have to be sacrificed, such as that annual golf membership, or the round-the-world cruise they have been planning for years. That’s a hard reality to face and a difficult decision for them to make.

Taxes, when not managed properly, can also be devastating to one’s accumulated wealth. A 2013 Lincoln survey, “Expense Challenges of Age 62-75 Retirees,” found that retirees often underestimate the impact of taxes during retirement. Once again, there are products such as annuities that can defer taxes and help consumers hedge against the potential of rising costs, but to make that investment, they may have to adjust some of the activities they’ve planned for retirement.

See also: 10 tax facts for retirees

Too often, there is a tendency for consumers, even those at an age where they “should know better,” to believe they can manage a financial plan. After all, they watched a few peers day- trade on the internet during the 1990s tech boom. In reality, most people don’t have the expertise or competence to manage the complexities involved without the help of an advisor.

An advisor intent on serving a boomer client population has to understand what drives a client nearing retirement, including a whole new set of perceived vulnerabilities. These clients of a certain age have achieved much, but that doesn’t mean that they don’t need you and need you right now.

Advisors can help clients figure out if they have put enough money put away to achieve the outcomes they had planned in retirement or if they need to make assets work harder to generate additional income. In either case, advisors can add value by demystifying the retirement process. They can provide a clear understanding of where the boomer may be at risk, and by delivering sound investment advice, to help them reach those outcomes they desire in retirement.

Whether on the cusp of retiring or 10 years out, every baby boomer should have a financial blueprint or financial plan for retirement that’s adjusted, not every 10 years, but on a regular basis. This blueprint should incorporate strategies for wealth protection in addition to wealth accumulation. The strategies for those about to retire and those 10 years out from retirement will differ based on the options available to them.

By having a solid, flexible plan in place, the baby boomer can examine options and make the adjustments needed to help ensure a smooth transition into retirement that’s based on reality, rather than “what if.”

But at the end of the day, they need knowledgeable advisors who understand their issues and can help guide them through the planning process, as well as better understand the options available. One size does not fit all.

As an advisor, you’ll be able to tell easily enough if you’re in sync with a boomer client. If you listen to the William Tell Overture you’ll think of the Lone Ranger.


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