- Clients getting ready to retire are running out of time to create the retirement they always envisioned.
- They need your guidance to evaluate if their financial strategy will last as long as they do.
- Medicare and Social Security are now very real concerns, and clients need someone they trust to help them navigate these new waters.
Life is full of important events. And each one brings with it a series of financial decisions that can affect your clients’ finances for years — or even decades — to come.
For clients getting ready to retire, things have finally gotten real. The goal line is in view, and the endless possibilities that retirement holds are now more vivid. For clients you’ve been talking to for years, they (hopefully) should be feeling confident about what their retirement lifestyle holds for them. For those you’re meeting for the first time, they could be feeling a bit panicked about their financial futures.
Here is a pre-retirement checklist of how you can help them with major financial decisions:
Sharpen the focus on their financial picture
Clients retiring within the next 10 years will be looking for a solid assessment of their financial outlook. They’ll want guidance on setting a rough retirement date or if they should put it off — and for how long. Review the sources that will make up their retirement paycheck and look for any shortfalls. If you find some, help them create a financial strategy to address those income gaps. If they are 50 or older, counsel them on maxing out their retirement contributions and, if possible, making catch-up contributions.
Retire debt & build savings
Clients who are in debt should make paying off that debt a top priority before taking the retirement plunge. High-interest consumer debt such as credit card balances, car loans, and mortgages can prevent their retirement years from being their best years. Also, discuss building up emergency savings because life doesn’t stop throwing curveballs in retirement. It may mean them having to work a few extra years than they planned, but it’s better to find out now than later.
Discuss medical costs & long term care needs
A client might be in great shape now, but Father Time and medical costs still have a way of catching up to them. In fact, the average 65-year-old healthy couple retiring this year is expected to need almost $364,000 in retirement to cover healthcare costs.1 There’s also long term care (LTC) for them to start thinking about. Someone turning 65 today has almost a 70% chance they will need some kind of long term care during their life.2 Help them devise a plan so healthcare and LTC costs won’t tarnish their golden years.
Speaking of health care, clients may need a basic tutorial on Medicare, including when and how to sign up. Discuss all the different parts and what makes sense for their individual situation. Even if they’re a number of years away from 65, it’s still good to plant the seed and make them aware of their options.
Probably one of the most frequent questions clients have is around Social Security. Help them estimate their payments and discuss the best claiming scenario for them as well as the advantages to waiting until age 70 to claim their benefit if they’re able.
How clients drawdown their retirement portfolio is where you can really prove your worth. The old rule of thumb of 4% a year may be a good starting point for some, but it may or may not work for others. Discuss which sources to tap first and why. Then talk to them about required minimum distributions and the tax implications so they aren’t surprised after they turn 70½.
It’s never a happy topic, but clients at this pre-retirement stage should be thinking about estate planning if they haven’t already. Remind them that it’s not just for the wealthy, and they probably have more than they think that needs to be accounted for (house, cars, savings, kids, etc.). Plus, it makes it easier on surviving relatives since they won’t have to guess or argue about your clients’ final wishes. If necessary, refer them to a trusted estate planning attorney to be sure they have all their bases covered.
Discuss their retirement dreams
To get the whole picture, discuss their plans for retirement. How will they be spending their newfound free time? Do they want to travel? If so, where and how often? Will they still work part time or start an encore career? Are they going to sell their home and move somewhere warmer or closer to family? What about taking classes or pursuing a new hobby? The answers to all these questions can help you fine tune their retirement strategy to include any new expenses that may come with enjoying their golden years to the fullest.
Be the financial resource they need
Clients preparing for retirement need you now more than ever. Their window of opportunity to create the retirement they deserve is closing quickly. They need your guidance to help them make the most of their remaining years in the workforce and set them on a course to make their retirement years their best years.
Share our 12 Steps to Prepare for Retirement checklist with your clients.
Things to Consider:
- If you know a client who might be thinking about retirement, it might be a good time to reach out to them and review their level of preparedness.
- Clients looking to retire may have an income gap you can help them prepare for using different financial solutions.
- Clients getting ready to retire may have adult children that are working and could use financial guidance as well.
1 “2018 Retirement Healthcare Costs Data Report,” HealthView Services, 2018
2 “How Much Care Will You Need?,” LongTermCare.gov, accessed May 2019
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 insurance, securities, tax, legal, or financial advice or guidance. Please consult your personal independent advisors for answers to your specific questions.
Neither Transamerica nor its agents or representatives may provide medical, tax, investment, or legal advice. Anyone to whom this material is promoted, marketed, or recommended should consult with and rely on their own independent tax and legal advisors and financial professional regarding their particular situation and the concepts presented herein.