Managing the New Retirement "Normal"
As modern medicine advances, so does the average lifespan of Americans. According to CNBC, for every year that elapses, three months are added to our life. This scenario poses a unique challenge to financial advisors who are working with clients nearing and in retirement and SII Investments wants to help you navigate through this complex situation. Dedicated to financial advisory support, SII wants to share some insights on managing the new retirement normal as the average person is living longer.A Broken Financial Model for Retirement
Lifeline models are shifting from linear to cyclical, meaning that throughout the average person's lifespan, they are cycling between work, school, sabbaticals, more schooling, and more work. This shift in lifestyle is making a broken financial model for retirement. To combat this change, it is important as a financial advisor to gain an in-depth understanding of your clients' life plans and open the lines of communication at the beginning of your partnership with them to be able to accurately plan.Planning for an Uncertain Lifespan
As life expectancy is increasing, planning for a client's retirement future can be difficult. According to Forbes, choosing a planning horizon to age 90 is a safe choice because one in four people are expected to live that long. It is important to listen to your clients' concerns. If they believe they will outlive their financial assets, choosing a longer planning horizon is crucial. Your job as a financial advisor is to help create a comfortable and encompassing environment for your clients' financial needs and wants.Transfer Risk to a Third Party
A common strategy to combat feelings of outliving a retirement savings is to transfer the risk to a third party. This can be done by attaining sources of lifetime income. Some of these methods can be derived from:
- Deferring social security benefits
- Purchasing a life annuity
The "new normal" for retirement is something that financial advisors should take in stride and work with the client to derive an effective and reliable plan for. Always remember to listen to the clients' needs and provide them with your knowledge and resources regarding how the industry is changing. Contact us today to learn more.