Retirement is here. It’s all around us. the median age of our clients is almost 70. Stories about clients’ lack of financial literacy and preparedness are everywhere. The top advisors might reply, “My clients are all set.” But what about the other 97% of people not lucky enough or wealthy enough to earn that level of attention from skilled professionals? Most Americans are on their own.

Is it a problem that the financial industry is generally unprepared for the delivery of retirement advice to all but a few? Or are we content with our “best efforts”? Is it enough to tell people to save more or to tell the adult children of our clients to go pound sand? There are people doing deep thinking about retirement challenges, but most clients will never meet one of those thought leaders and will not qualify for the attention of a great advisor.

No one thinks this retirement planning stuff is easy. In fact, it’s dauntingly complex. In an age of digitization, there is an increasing demand for personal service. The numbers of people looking for (and requiring) assistance are rising. Most haven’t prepared for the lifestyle they want and will have to make adjustments in real time.

“Retirement” is more than just a life stage or a financial condition. It’s a complex personal and emotional transition for the retiree that continues until they die. It also requires their family members to get involved in various ways, even though they, too, are new to the experience (and mostly new to the advisor now intimately involved with their family’s matters).

The top advisors will lead the way in this challenge, negotiating the new path forward. They’ll likely be offering not one but a complex array of solutions aimed at moving targets: the client’s needs. The needs of extended family. Truly the work is “craft,” as these top advisors will show us. But craft isn’t something easily scaled to match the greater demand for the advisors that follow.

No matter how mindful a client’s initial retirement plans might be, there will be surprises and failures. The most important questions for planning cannot be answered with certainty. We don’t know exactly when we will die, if we will suffer from dementia or need special care, and we really don’t know what markets will do or where rates will be or what inflation may do to healthcare and living costs. Without solid answers to those questions, we cannot provide comfort to a couple retiring with $500,000 and Social Security.

If they have family health care issues or brilliant longevity, even $1 million might not cut it. And that will be a surprise to most hardworking Americans—the vast majority of whom have not saved anything like those sums. And for sure don’t expect any sympathy from government leaders toward someone with half a million in a 401(k), even if that person is still vulnerable.

Given these unanswered questions, it’s likely we’ll need to retool a lot of people’s retirement plans, perhaps many people’s, coming to the inevitable rescue of folks who didn’t get it right the first time or suffered from a healthcare issue or some other financial calamity, anything that might have ruined what were otherwise the best intentions.

Three Talks
Good planning involves three talks—one about finances, one about investments and one about family. Each of these talks will overlap the others in a Venn diagram, one that’s forged by forces largely outside our control.

The financial conversation. This addresses the nuts and bolts of how much we need and how much we have—the income and expense realities associated with retirement. It will unfortunately involve imperfect projected data inputs flowing from predictions. How much will you spend? How much will you need? Those questions depend largely on when you will die. When is that exactly? Our health is another big wild card.

Most of us seldom calculate with any accuracy how much we have to spend in retirement. That’s one reason why, as Wade Pfau, professor of retirement income at the American College Of Financial Services says, delaying retirement and continuing to work is the most effective way to “shore up” a leaky retirement plan.

A decade ago, Americans in their 60s represented the fastest growing segment of the workforce. Since the pandemic struck, however, the rate of retirement has accelerated by as much as 75%, according to some estimates. Observers like Ric Edelman, who built a huge RIA serving primarily middle-class clients, believe most of these retirements are unsustainable and that many retirees will be forced to re-enter the labor market—either out of necessity or desire.

First « 1 2 3 » Next