Why It Matters:
  • Retirement can come with an unexpected amount of stress.
  • Your client looks to you for help in all aspects of financial planning in retirement.
  • Guiding your client through the difficulties of financial stress may help them on the path to financial freedom.

Four sources of retirement stress and how to help clients deal with them.
1. The realities of a fixed income

Managing day-to-day expenses on a fixed income can be stressful for your clients and you can help them ensure their basic needs are met.

  • Consider an income floor.

Suggest your clients match their day-to-day expenses (housing, food, clothing, gym memberships) with guaranteed sources of income (social security, pensions etc.) to free up their other assets for investment. This way they know their expenses will be covered, while giving their money an opportunity to grow.

  • Introduce them to financial products that mitigate taxes and inflation.

Make sure your clients know about products that leave assets in a qualified, tax-free, or tax-deferred account as long as possible or leverage taxable investments managed to increase tax-efficiency. Educate them about products that adjust over time to balance growth and risk as they approach and eventually live in retirement.

2. An unpredictable market

Many clients will have investment assets affected by the risks of an uncertain market. They’ll need confidence in your guidance to work through this stress.

  • Bucket their assets.

Bucket managed assets for different time frames: one to three years in cash equivalents, three to five years in fixed instruments, and five or more years with equity exposure. This may help your clients to feel secure in the short-term while leaving opportunity for growth in the mid-term.

3. Expectations versus reality

Your clients might spend a good chunk of their working life daydreaming about retirement. Make sure they’re dreaming about what they really want.

  • Help them visualize their unique, realistic retirement.

Your clients might be looking to social media, movies, or television to tell them what their retirement should look like. Instead, try to help them figure out the essence of their retirement dreams. If they’ve always dreamed of owning a boat in retirement, but find they can’t afford it.

Ask them more about that dream. Do they just want to own something impressive? Or do they want to be near the water? If it’s about the water, suggest they work part-time as a touring boat captain, or volunteer with a program that teaches young people to sail or canoe. Help them shape their unique retirement in a financially realistic way.

4. High health costs

There’s no way around it – in retirement your clients will need healthcare and they will probably need more of it than they think. Here are three ways you can help.

  • Get them to understand their Medicare gap.

Explain the options available to supplement Medicare. Explain Medigap plans and Medicare Advantage plans. Arm them to make a decision that ensures they will be fully covered in retirement.

  • Plan early for their long-term care.

Since long-term care is expensive and likely isn’t covered by their health insurance or Medicare, talk to your clients about independent long-term care policies; long-term care riders on life insurance policies, and annuities that offer long-term care waivers. Most importantly, plan early and show your clients how their policies can build up cash value while keeping their premiums to a minimum.

  • Encourage them to stay healthy.

This one’s a bit of a no-brainer, but it’s worth mentioning. Reducing your client’s healthcare needs with lifelong healthy habits can fight financial stress caused by healthcare costs. You are an important voice in their life. Always mention the financial importance of making healthy choices and share tips and information for healthy living on Knowledge Place.


Things to consider:
  • Talk to your clients about financial stress in retirement.
  • Help your clients visualize their financially realistic retirement and plan how to spend their money.
  • Become a voice for healthy life choices.

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