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Financial advisor speaks with his mature clients while reviewing their retirement documents.
Retirement Planning

Where’s my catamaran? Helping your clients set smart and realistic retirement goals

Your clients have probably spent a lot of time picturing their retirement. Maybe they dream of sailing to new ports on a catamaran or jet-setting to exotic destinations.

Unfortunately, their retirement savings might not match up with that dream lifestyle. And that’s especially true when there’s the potential for so many speed bumps along the path to retirement.

Anything from unexpected healthcare costs to market volatility can derail their retirement dreams. That means it’s especially important to focus on setting smart and realistic goals.

Does retirement equal freedom to your clients?

Many people expect retirement to be the most liberating time of their lives. They finally will have the freedom to do all those things they have been putting off, like exploring new places or taking up a new hobby. For many, however, those dreams aren’t aligning with reality. Social Security is rapidly shrinking and there are estimates it could be depleted by 2034. That could mean a much smaller payout if your clients are still a decade (or more) from retirement.

If clients are counting on Social Security to make up the majority of their retirement income, they might be in trouble. Unfortunately, many Americans do not have enough saved for retirement to make up for the gap.

According to a report by the Economic Policy Institute (EPI), the mean retirement savings of all working-age families headed by individuals between 32 and 61 years old is $95,776. That average may be skewed because of huge retirement readiness gaps between lower-income families and wealthy families. A more accurate and alarming measurement may be the median retirement savings per family, which, according to EPI, is only $5,000.

Right now is the perfect time to help your clients dive into what they can do to improve their situation and help them plan accordingly.

Realistic long-term planning

If you are concerned that your clients’ expectations may not match their retirement reality, suggest that they give their retirement plan another look and build in some cushion for the unexpected.

Clients should consider their current health and potential healthcare needs. Healthcare costs typically increase with age, according to data from the Bureau of Labor Statistics. For many, it’s one of their largest monthly expenses. Ask them, have you accounted for increased spending and potential needs?

Your clients should also think about their current lifestyle. Are they planning on maintaining it while in retirement? If that’s their goal, they need to have enough set aside to ensure a smooth transition.

Help your clients get smart about retirement

Having a general idea of what they can live on and their spending potential can help set a baseline for your clients when it comes to mapping out their retirement plan. Once your clients have the outline of a financial plan, it’s much easier to evaluate whether they need to adjust their retirement saving or their retirement expectations.

Hand-in-hand with setting smart goals is proper planning for the long term. Your clients should also make sure to take care of the basics such as a living will for health emergencies and a last will. They should also check their beneficiaries and know what will happen in the event that they or their spouse passes away.

Each of these small yet important steps may help your clients prepare for any bumps along the road. Working with a financial professional who understands their particular situation could ensure they are on the right path toward the retirement they want.



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