Retirement Watch

5 ways financial advisers can steer clients toward a successful retirement

Knowing common retirement blind spots can make a big difference in mapping out your clients' futures

Jul 5, 2016 @ 4:10 pm

By Philip E. Caminiti

When my kids were young they thought I had eyes in the back of my head.

“Watch for cars!” I'd warn from the garage, while filling up the mower with gas.

“Stop pinching your brother!” I'd shout from the driver's seat, keeping my eyes on the road, heading to soccer practice.

Now that my kids are older, my parenting sixth sense isn't constantly on high alert anymore; but knowing my blind spots still serves me — and my kids — well.

Similarly, helping your clients plan a successful retirement isn't only a matter of understanding the obvious steps along the way. An alarming study by The American College pegged 80% of older Americans as illiterate when it comes to basic retirement planning knowledge. This means your retirement-minded clients will also lean on you for assistance in helping them see what they do not.

You don't need to have eyes in the back of your head, but knowing common retirement blind spots can make a big difference in mapping out your clients' futures. Here are my top five:

1) Adding guarantees

Social Security and pensions: The only two ways to generate guaranteed income, right? Not quite. While probably you have clients enjoying one, or both, of these types of income streams in retirement (along with whatever they're withdrawing from investment accounts), there are simple ways to add more. An income annuity, for example, offers just what your clients love about their Social Security and pension checks: guaranteed income for life.

2) Claiming Social Security

Speaking of income for life, did you know that more than half of people claim their Social Security benefits at age 62 instead of waiting until full retirement age or later? That means many people are leaving money on the table. Help your clients recognize this blind spot so they don't rush into a Social Security claiming decision. Social Security likely will be just one part of their overall retirement income plan — and maximizing that plan is key.

3) Asset location

You've heard it said about the value of real estate: location, location, location. But if you're not thinking about retirement asset location too, you might be missing out on smart tax planning. Understanding how different types of accounts are taxed — or not taxed — in retirement can help your clients make better decisions. Encourage them to talk with a tax adviser to make sure they're considering the tax implications of the different types of accounts they own.

4) Required minimum distributions

Chances are your clients have a good deal of their retirement savings stashed away in tax-qualified accounts like IRAs and 401(k)s. You probably know that when you turn 70, you have to start withdrawing some of that money via required minimum distributions. What most people miss, though, is the opportunity to consider all their options when it comes to required minimum distributions. For example, your clients may be able to defer some of their required minimum distributions until as late as age 85 if they don't want or need that income — or the associated taxes — now.

5) Not asking for help

In today's one-click-away world, there's no shortage of available resources to help you do just about anything yourself. In fact, I hear it from advisers all the time: My clients just want to figure out their own retirement plan. Maybe they've found an online calculator or subscribe to a financial YouTube channel. Whatever the case, they feel like they don't need your help. As I've mentioned, there's a lot to be aware of; some obvious, some not so much. A financial professional can help clients think holistically about their retirement. Be clear with your clients about the specific things you specialize in so they can make better decisions about when to ask for help.

Philip E. Caminiti is head of retail annuities sales, third-party distribution at New York Life.


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