On the other hand, have them think about what they plan on doing if they decide to stop working completely. Help them set long-term goals, and make sure their investments are aligning with these goals by having a well-diversified portfolio. Also, help them determine the amount they should withdraw weekly, monthly, or annually. A number of factors should beconsidered here, such as their account balance, retirement age, taxes, rate of return, and interest. Review your clients’ savings and contribution plans, and proactively work on a retirement strategy with them so they can continue to live within their means, no matter what their situation may be.
2. Think about your expenses in retirement.
To help your clients budget for retirement, have them make a list of their current costs, both fixed (mortgage, healthcare, and so on) and variable (eating out, car maintenance, etc.). Then have them develop a mental image of their future by asking them three questions to help them assess their potential future spending: where do you plan on living in retirement? What do you plan on doing? Who do you plan to spend your time with?
Are your clients on the right savings path to live their desired, retired life? Or are there some changes to be made to have their retirement savings last them a little longer? For example, maybe they’recurrently paying a mortgage on a home that’s bigger than they need. They could consider downsizing, which would remove that expense and allow them to withdraw less from their account each month. Also, they can begin working on a healthcare plan now for their future. Work with your clients to enroll in the best plan available to them, depending on what their current employer offers or their age. Reviewing and understanding these plans now will help cover healthcare costs once in retirement.
Walk them through this exercise to help them prepare and plan for some of those monthly and fixed costs, and put them in a better position to make financial decisions now, so they are prepared to enjoy their life in retirement.
3. Lastly, don’t go at it alone.
Help your clients build a team as they enter retirement, and show them the tools and resources available so they will have enough money saved or invested to live comfortably throughout their retirement. Introduce them to trusted tax and legal professionals. Together, you can review your clients’ sources of income in retirement, such as their 401(k), pension, Social Security, and/ or personal savings. Then you can evaluate how much they will need, their withdrawal options, and the most efficient way to take the income.
These variables and decisions can be both confusing and overwhelming. Show your clients that they have your support, and help take some of their stress away by simply being available and pointing them in the direction of other professionals that they can rely on now, and throughout their retirement.
Help your clients to stay invested and hopefully learn from some of these current challenges to have a successful retirement. Get them on the right path, and emphasize the importance of having a long-term perspective. Remind your clients that just like saving for retirement is long-term, spending in retirement should be long-term as well.
Investing involves risk, including the possible loss of principal. Diversification does not ensure a profit or protect against a loss in a declining market.