Your clients have taken pleasure in creating a prosperous lifestyle; they chased the American dream and tried to convey a more prosperous lifestyle for their children. Then they retire … time to settle back and enjoy different facets of life. Not working is a big change in and of itself. However, living the rest of your life off of your nest egg and social security is an even bigger transformation. This period of time could be the most challenging and difficult of all. Their retirement income becomes more important than ever.
They make a big transition when they retire. You see, prior to retirement they earned money. At retirement they become recipients of income. They become beneficiaries of retirement income. One of their income streams is social security. But from where does the rest of income appear? It will come, of course, from their nest egg. Will it last their entire lives? How do they know? How long will they live? Will their spouse be in financial danger? How do they avoid making a mistake when planning their retirement income?
Today, this situation is much different than that of previous generations. It will be even more different, and possibly more difficult, for generations to come. Why is that so? Well, first of all, people are living much longer so our money must last longer. They need a guarantee to keep them in the lifestyle to which they have become accustomed. Plus, they have to factor in inflation.
Inflation at 4% (past 20 year average is 3.6%) can have a devastating effect on their spending dollars. It’s also good to understand that the health care inflation rate is more than double the general inflation rate. So, this takes a lot more planning. They can’t afford to make mistakes. It’s different if you make a financial mistake at 26 years old, or 36, or 46 … even at 56 you can still recover. But, it’s much more difficult to recover at 66.
Today’s pre and present retirees need to have a plan … not just a product. Retirees need solutions and assurances. They need the services of a trusted advisor that can provide guarantees … yes, guarantees regarding their retirement income. My suggestion is a complete review with your clients. Determine a retirement income amount that is necessary, adjust for inflation, factor in their life expectancy, then implement and monitor the plan. This requires dialogue … this requires conversation…this requires a professional.
Give your clients a call today. This is too important of a subject to ignore. Their lifetime income could depend on it. Pick up the phone and call them today. If you don’t ... someone else will.
Until next time,
Raymond J. Ohlson, CLU