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For many clients in their 50s and early 60s, the challenges to achieving happy and secure retirements have never been greater.
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Dan Richards
ClientInsights-President
6 Adelaide Street E, Suite 400
Toronto ON M5C 1T6
(416) 900-0968
- Many took a big hit during the real estate downturn from which they haven’t recovered.
- A large number of boomers want to lead more adventurous lives in retirement than have retirees in the past. Boomers have more ambitious plans for travel and other post-retirement spending.
- Many clients in their 50s and 60s are uncertain about how soon adult children will achieve financial independence and some want to help children purchase their first home.
- In some cases, there’s lack of clarity on whether a client’s job will be there to the traditional retirement age of 65.
- People also face longer life spans with the potential for greater costs for assisted care in their final years.
- All market participants are facing greater-than-normal uncertainty for global economic growth and stock markets and painfully low returns on bonds and guaranteed investments.
Given these challenges, three recent articles will help you when talking to clients about retirement. The first article demonstrates that spouses who have open conversations around their plans for retirement end up happier and more successful. Financial advisors can be instrumental in making these conversations happen – for most clients, their advisor is the one professional who can credibly raise this topic for discussion.
The second article has the provocative title: “You might live to 100, will your money?”
Wharton School professor and retirement expert Olivia Mitchell argues that given longer lifespans, people should plan to work as long as possible, and not just for financial reasons. Research shows that people who work longer are more likely to be healthier, maintain mental acuity and retain social bonds with friends and work colleagues. But clients who want to work later have to plan for this in advance. Mitchell notes that working longer often requires upgrading skills, which that has to happen well before people approach retirement age.
One reason to stick to a full-time job as long as possible is that people who retire often find it challenging to get part-time work that’s as financially rewarding and as satisfying as their pre-retirement employment. As an aside, the advice to work as long as possible is consistent with an interview I conducted with Alicia Munnell, Director of the Center for Retirement Research at Boston College.
The final article on “downward mobility among the middle class” provides food for thought for younger clients whose spending habits mean they aren’t saving enough – though its alarmist tone means this article should be used selectively. It describes a 77-year old Floridian who at one time was the vice president of marketing for a well-known consumer-products company and today works part-time jobs paying $10 an hour, to afford extras. In the face of this, he maintains a remarkably positive attitude –nevertheless, for some spendthrift clients this article will be a useful wake-up call.
conducts programs to help advisors gain and retain clients and is an award winning faculty member in the MBA program at the University of Toronto. To see more of his written and video commentaries, go to www.clientinsights.ca. Use A555A for the rep and dealer code to register for website access.
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