Advisers can shine a light on the darkness of 2020

The pandemic has upended the retirement plans of many Americans who have had to deal with the loss of a job, a decline in their income, their own illness or the illness of a family member. 

Recent reports indicate the extent of the damage that’s occurred over the last six months. An Alliance for Lifetime Income survey found that 56% of those not yet retired were rethinking their retirement plans, and only 33% of respondents were confident they had enough money saved for retirement.  

Financial advisers have a big role to play in assisting their clients who are approaching retirement with everything from bolstering their savings to managing their income in retirement and making the mental adjustment to the world post-work.  

Panelists at the InvestmentNews Retirement Income Summit, held virtually over the last couple of weeks, had a number of pointers for advisers. Ed Slott of Ed Slott & Co. reminded everyone of the Aug. 31 deadline for unwinding required minimum distributions taken from retirement accounts earlier this year that were rendered unnecessary as a result of the CARES Act. 

When it comes to retirement finances, Wade Pfau, a professor at the American College of Financial Services, noted that reverse mortgages can be a valuable source of funds that could allow clients, for example, to delay claiming Social Security, but warned advisers to start considering such arrangements well in advance of when they will be needed. 

Saving for retirement is one thing, but turning those savings into retirement income is another. Wealth management consultant Steve Gresham emphasized the value of “bucketing” strategies that split an individual’s savings into buckets tied to different types of expenses.  

And a number of panelists discussed the role that annuities can play in providing retirees with guaranteed income. Lifetime income products could become an even bigger topic of conversation with clients now that they’re going to be showing up in more 401(k)s as a result of a provision in the SECURE Act. 

Another survey, by Nationwide Retirement Institute, underscores the fact that many people aren’t well informed about how Social Security benefits work, with just 37% of baby boomers saying they’re confident in their knowledge of Social Security. Advisers should work with clients to ensure that they’re making the right choices about signing up for Social Security, including coordinating claiming strategies when they’re working with a couple. 

Finances aren’t the only thing that clients need help with. A number of panelists at the Retirement Income Summit emphasized the mental shift that people face as they leave the workforce and enter the unstructured world of retirement. 

In the current environment, their concerns about that transition may be magnified by the uncertainties created by COVID-19 and its impact on the economy. Financial advisers are ideally situated to help clients talk through their concerns on all these issues.