How to navigate your clients through retirement ‘crunch time’

When it comes to retirement planning, the idea of crunch time takes on an entirely different meaning.

Those tuning into this year’s NBA finals will be treated to lot of talk about how players respond during so-called “crunch time” — the pressure-packed minutes or seconds when a basketball contest is on the line.

When it comes to retirement planning, the idea of crunch time takes on an entirely different meaning. And it’s certainly no mere game for those investors or advisors forced to wrestle with the consequences.

“Crunch time is that time in your life when you’re around 50 years old, maybe 10 to 15 years from retirement, and you wake up in a bit of a panic. You realize that you have been going about your life accomplishing things, raising kids, paying the mortgage, growing in your career,” said Jennifer Lee, financial advisor and founder of Modern-Wealth. “And yet you have not planned to replace your income. You have 401(k) plans, IRA, annuities, investments, and they’re all over the place with no combined strategy.”

That wake-up call Lee describes is a critical period for advisors and their clients to get together — and get it together.

“It’s not too late, and there’s no time like the present to strike while it’s top of mind,” Lee said.

CRUNCHING THE DATA

Even when one gets the courage and cognizance to “strike” during crunch time, the retirement mountain ahead may seem demoralizingly unscalable. And the data bear out that sense of hopelessness.

According to a recent study from Allianz Life, recent financial crises have caused 46% of Americans to say they have reduced or stopped saving for retirement and don’t expect to increase their savings levels in the foreseeable future. Meanwhile, 49% say that the increase in everyday costs is one of the greatest risks to their retirement income, up from 44% who said that in 2022 and 38% in 2021.

Still more troubling is the revelation that nearly 40% of Americans admit their retirement strategy is derailed and they aren’t sure when or how they’ll get it back on track. And a remarkable 61% of Americans say they are more afraid of running out of money than they are of death.

That’s right, we’re talking “life and death” here. Forget about putting a ball through a hoop, this is the real crunch time.

STRIKING BACK

Kelly LaVigne, vice president of consumer insights at Allianz Life, is fully aware that crunch time can be overwhelming for somebody trying to build retirement account balances at the tail end of a career. The first thing to do when feeling overwhelmed by retirement, in his opinion, is to revisit your financial plan. If you don’t have one, create one immediately.

“Your plan will solidify abstract goals like saving enough for a comfortable retirement with incremental steps along the way,” LaVigne said. “There will undoubtedly be an event that affects your plan. But having that plan will keep you from panicking and potentially stop investing. If your current financial plan doesn’t address your current concerns, it’s time to adjust your plan to incorporate new strategies.”

While the lack of time to build a nest egg may seem like a devastating negative, Modern-Wealth’s Lee suggests flipping the script and using age and the wisdom that comes with it as assets.

“If you’re starting late in the game, you have resources, knowledge and skills that you did not have in your 20s. You likely have more discretionary income to invest and you’re more focused and serious,” Lee said. “Time is not working for you, so you must work hard, fast and efficient.”

Brian Hartmann, partner at Granite Bridge Wealth Management, a part of Advisor Group, said he often meets with families who have been caught up in the day-to-day shuffle for years only to wake up near retirement wondering if they have enough stashed away. During the initial meeting, he first tries to settle any insecurities and then moves on to determining how much income they will need to live the life in retirement that they desire.

“At this stage of life, general advice will not be enough. The need for a truly tailored and personalized plan is critical,” Hartmann said. “Often, this is the first time that families walk through this exercise and leave feeling relieved and with additional confidence in their future.

“Above and beyond, we strive to be the firm that provides clients with the peace of mind and confidence that they need to live a great life,” he added.

Andrew Spearman, wealth advisor at SageView Advisory Group, agrees that — crunch time or not — it’s never too late to put together a comprehensive retirement plan.

“Working together, we can help address some of the important issues that surround retirement and put some of their fears to rest. Maximizing your Social Security benefit seems to be one of the biggest challenges I see clients struggle with as they approach retirement. Markets change and regular reviews of the plan will help ensure that they stay on track to reach the goals that are important to them and their family,” Spearman said.