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Financial literacy for your clients in their 40s and 50s

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As your clients enter their 40s and 50s, they may find themselves responsible for the care and financial needs of their children and their aging parents, while also trying to keep their own goals in mind. Known as the Sandwich Generation, these clients are likely in their peak earning years, so showing them how to plan for unexpected expenses and maximize that incoming wealth will be important in helping them reach their financial targets successfully.  

There are many new opportunities to talk about financial literacy and confirm that they understand the basics as they relate specifically to this time in their lives. According to a recent financial literacy study, when Gen X participants were asked which financial skills are important to acquire today, they listed investing, saving for retirement and reducing debt among their top goals. Here are four opportunities to educate your clients in financial planning and saving strategies for the future.

1. Education funding and costs

For clients with young children, start a conversation early about the costs of education to give them time to save. According to Sallie Mae’s How America Pays for College report, families paid an average of $25,313 for higher education over the 2021-2022 school year, with 87 percent using income and savings to cover college expenses. With high costs ahead, talk with your clients about options to cover college expenses like a 529 savings plan or an annuity. For clients who have high school children nearing graduation, you may also want to discuss the FAFSA® (Free Application for Federal Student Aid), which can give access to grants, scholarships and federal financial aid. 

2. Re-evaluate goals based on time horizon

If financial plans were made in your clients’ 20s and 30s, they may need to be revised due to changing income streams, life events or financial needs. Spending habits can differ from generation to generation, and for clients in this life stage, they may be putting more income toward healthcare, housing and personal insurance costs than in previous years. Revisit their long- and short-term savings goals to help them understand how their current savings habits may affect their retirement. It can also reveal shortfalls that can be addressed starting at age 50 with catch-up contributions to retirement accounts.

3. Retirement budgeting and income streams

According to a recent study by Athene, members of the Sandwich Generation may have several concerns when it comes to retirement. Among the respondents, their top concerns were maintaining their standard of living, lacking enough assets to retire and having to rely on adult children for financial support. Over a third of the group also worry they will outlive their savings, and nearly the same number of respondents are concerned that they’ll experience declining health that will require long-term care. While many of your clients are saving money in 401(k)s, IRAs, annuities and other retirement saving options, they may need help seeing exactly how those streams will come together in retirement — especially around required minimum distributions (RMDs) and possible taxes. 

Make a full chart of accounts, from Social Security to drawdowns from managed money accounts. This will help your clients see how everything they are saving for will come together and illustrate the importance of proactive planning to ensure they have the retirement income they need for both expected and unexpected expenses.

4. Legacy planning

Clients in their 40s and 50s may be starting to think about their legacies. You can help make sure they understand the essentials of end-of-life planning. Help them clarify the roles that beneficiaries, wills and trusts can play in their estate plans. They may also want to explore assigning a power of attorney who can make legal and financial decisions on their behalf.  

Helping your clients better understand key concepts and see the importance of taking a holistic approach to planning for the future can allow them to make sound financial decisions that have a lasting effect. As your clients enter their 40s and 50s, there is an opportunity to help boost their financial literacy and give them the tools they need to achieve their goals and create an income stream they can count on for many years to come.

Three things you can do today

  1. Review your book of business and make appointments with Sandwich Generation clients who are caring for children or aging parents or who’ve had a recent life event to help assess their changing needs.
  2. Learn ways to support these clients in the Understanding the Sandwich Generation e-book.  
  3. Help your clients explore this life stage and their current retirement readiness by taking this quiz.  

Insights on Athene Connect. Tips, tools and resources to grow your business by helping clients retire with confidence.