A traditional retirement that automatically triggers at age 65 may no longer exist, advisors say, because there are too many variables to be considered for each individual.
“I don’t know what normal would be,” says Glenn Wiggle, founder, partner and chief compliance officer of Independent Solutions Wealth Management LLC, an RIA in Buffalo, N.Y. “We have clients who are approaching retirement whose parents are still living. There are a lot more circumstances to be figured into retirement today and a lot more diversity in the situations we see.”
Advisors need to be ready to deal with three-generation families and retirees who have to work longer to take care of aging parents, says Wiggle. Advisors also will have to help clients who want the traditional retirement age of 65 or 66, but who have not saved for the longer retirement that longevity probably will provide.
Advisors need to consider how their clients, who have been schooled never to take money from their retirement accounts, will bridge the gap between normal retirement age and age 70, when their Social Security benefits will be at their maximum, says Joe Lucey president of Secured Retirement Advisors in St. Louis Park, Minn.
“Taking money from a retirement account, and paying taxes on it, may be preferable to taking Social Security before age 70, but you have to convince some people of that fact,” Lucey says. “Or maybe money can be obtained from the sale of a business or from CDs. There are a lot of different ways to bridge the gap if you look at it ahead of time.”
Other situations that do not follow conventional lines plague advisors dealing with potential retirees, says David Shucavage, investment advisor and retirement specialist at Carolina Estate Planners in Wilmington, N.C.
Shucavage had one couple as clients where the wife was 54 and the husband 70. He had a good pension and she had her own company and a substantial IRA, but she could not touch the IRA because she was too young. To insure her future, Schucavage helped her create a profit-sharing plan for her company, move her money to the plan, and buy a life insurance policy on her husband through the profit-sharing plan.
He has advised clients who are considering buying a large annuity to break it up into several smaller annuities.
“That gives them the ability to fine tune their financing. This is creative problem solving” that is needed for the new retirement realities, he adds.