As an adult, choosing the right house can be complicated.
Is it big enough? Is it the right price? What are the taxes? What mortgage rate can I get? Is it in a good neighborhood? What are the schools like? Does it need work? Will it appreciate in value?
As a kid at Halloween, choosing the right house is easy: Which one gives out full-size candy bars?
When I was growing up, I'd hit those houses first, knowing their supply would diminish quickly. Then at the end of the night, I'd circle back to the rest of our neighbors, knowing they'd be happy to unload what was left of their chocolate, lest it go to waste.
Even at a young age, there's a strategy to getting the most out of the time put in.
Retirement is no different. Through one's working years, a lot of time and energy is spent accumulating assets to afford a comfortable lifestyle. Why not make sure those assets are maximized when retirement finally arrives?
Here are some simple ways to help make retirement a little sweeter for clients:
SCHEDULE PAY DAYS
In 1980, nearly 80% of retiring workers enjoyed pensions. Today, the number is 25%. That means for millions of people, the onus is on them to save enough and plan properly for their retirement years.
While 401(k)s and other defined contribution plans have become America's choice for accumulating savings (86% of employers with 100 or more employees offer some type of retirement plan, with 82% of workers participating), they make ineffective retirement income plans.
That's because they aren't designed for generating income, nor do they offer much guidance about ways of doing so.
Simply helping clients navigate this transition — turning retirement savings into a retirement paycheck — can make a big difference in their financial outlook. Income annuities, for example, provide a way of turning a portion of assets into a lifelong retirement cash flow.
People are living longer than ever before. Retirees are more active, health care offerings are more accessible and consumers are savvier about their own well-being. But that also means retirement strategies need to look 20, 30 or even 40 years down the road. A lot can change on a road that long.
It's no surprise then that retirees rank “control of my money” and “safety of principal” as the two most important features when it comes to retirement income products. It's nice to know that money will be there when needed and that adjustments can be made on the fly.
There's nothing sweeter than helping clients make good decisions today that allow for flexibility in the future. A simple approach is showing them products that check all of these boxes at once.
For instance, some fixed deferred annuities offer withdrawal benefits that provide guaranteed lifetime income, access to the money and principal security together in one package. Help them select one that is consistent with their needs and specific situation.
DO MORE WITH LESS
When my grandparents retired, their priorities were twofold: 1) spoil their grandkids and 2) remain in their home. The challenges weren't necessarily simpler back then (although fixed incomes from Social Security and pensions covered more), but retirement expectations were.
Today, retirees expect more. Expenses that were once deemed “nice-to-haves” (or didn't exist a generation ago) are being called essential. One recent study found retirees now classify things such high-speed internet, shopping, pet care, vacations, professional hair color and smartphones as basic needs.
Coupled with increased life expectancy, these new retirement expectations put real pressure on a portfolio's ability to generate adequate income to maintain a desired lifestyle. In other words, how do clients do more with less?
A great way to help them feel better about covering their retirement costs is to first help them map their basic expenses. What are the things they cannot live without? Then, pay for these things with sources of guaranteed income, like Social Security, pensions or income annuities.
By paying for things they absolutely need with income sources that won't run out, clients can enjoy the sweetest treat of all: peace of mind in retirement.
Philip E. Caminiti is head of retail annuities sales, third-party distribution at New York Life.