The advisor’s guide to “talking boomer”

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.