- People are living longer, which will mean more time spent in retirement.
- Half of people under the age of 50 have no money saved for retirement, according to the U.S. Government Accountability Office.
- For many people, saving for retirement only becomes a high priority when they turn 50.
Research shows we’re living longer. For your clients, this may have a significant impact on how they save for retirement. For instance, individuals born in 1947 are expected to live until they’re 85; those born in 1967, the age of 91, and those born in 1987 can realistically expect to live until 97. Now more than ever, they may want to include their longevity and health as key considerations in their financial strategy.
If you think your clients prioritize retirement, think again
“Retirement income only becomes the highest priority concern for individuals aged 50 or older,” according to the World Economic Forum, which also states that the priority is low for those who make a lower income. Although clients under 50 and those in a lower income bracket will need a bigger nudge to start saving more for retirement, this might also be the case for your clients approaching or over 50.
How prepared are most of your clients?
There’s a chance some of your clients have nothing saved. “About half of households age 55 and older have no retirement savings (such as in a 401(k) plan or an IRA),” reports the U.S. Government Accountability Office (GAO). The other half has some money saved, but very little. The median amount of savings is $104,000 for households between the ages of 55 and 64, and $148,000 for households between the ages of 65 of 74, according to the GAO.
Remind clients of what they might actually need
It’s likely they’ll need more than what they’ve planned for; the average retiree spends about $44,000 per year and the average life expectancy has been increasing by one year, every five years. People will have to financially prepare themselves for those extra years.
Have the conversation now and help clients prepare for tomorrow
Encourage your clients to have a realistic expectation of how long they’ll live, so they know how many years to prepare for. They can take into account their health, gender, and daily habits instead of solely relying on averages for their life expectancy estimate. The Actuaries Longevity Illustrator is an online calculator that takes these factors into account and is an excellent resource to pass along to clients.
When clients estimate how long they’ll live, create a retirement strategy that can put them in position to succeed. Consider their longevity, desired monthly income, expenses, life goals, and overall health. If they’re worried about not having enough saved in their retirement account, here are some suggestions you can pass along via New Retirement:
- Add insurance products and ways to cover medical and care expenses.
- Consider financial products that offer guaranteed lifetime income.
- Work as long as possible.
- Delay taking out Social Security benefits.
- Consider downsizing or taking a reverse mortgage.
- Eliminate high interest debt.
- Optimize investment strategies.
- Save more and spend less.
Also be sure to send them to Transamerica’s Wealth + Health article so they can understand more of the statistics around their longevity’s role in a retirement plan.
Things to Consider:
- Encourage your clients to include retirement planning in their priorities.
- Share how longevity has an effect on what’s needed to retire.
- Send clients to Transamerica’s Knowledge Place for additional considerations in their long-term financial strategy.
Transamerica Resources, Inc. is an Aegon company and is affiliated with various companies which include, but are not limited to, insurance companies and broker dealers. Transamerica Resources, Inc. does not offer insurance products or securities. The information provided is for educational purposes only and should not be construed as, medical, insurance, securities, tax, legal or financial advice or guidance. Please consult your personal independent advisors for answers to your specific questions.
Please note that all guarantees are based on the claims-paying ability of the insurance company.