2-minute article

How to help your clients "catch-up"

Many people view retirement as an exciting time when they can live life on their own terms. Unfortunately, many Americans may run into financial issues when they retire. In fact, 44 percent of people aren’t very confident or confident at all that they’re saving enough for retirement, according to a 2020 survey conducted by the Harris Poll.

Help them be realistic about their retirement savings

Your clients may have an idea about how much they have saved for retirement, but having an open conversation with them about their retirement needs and goals will help you to help quantify exactly how short they may be.

To get the conversation started about their savings and budget, ask questions. Are they planning to downsize their home? Have they carefully plotted out their income streams, including Social Security benefits? Are they planning to work a part-time job in retirement or even start a second-act career? Having a detailed conversation about their retirement plans can help them create a budget and help you develop a retirement savings and income strategy that reflects their well-being on a holistic level.

Discuss ways to reduce spending and increase contributions

Show them how every dollar can count. Financial Advisor magazine says that focusing on any discretionary spending — vacations and new cars, yes, but also smaller daily budget items, such as eating out or clothes shopping — can add to retirement savings.

Next, focus on catch-up contributions, which many retirement savings accounts offer. According to the IRS, 401(k)s and 403(b)s allow for an extra $6,500 per year after age 50; traditional and Roth IRAs allow for $1,000. These funds can grow until retirement, but also be sure to explain the rules of required minimum distributions on each account.

Show them how to keep what they’ve got

Not only is it important to provide ways to help them catch‑up in their retirement savings, it’s also a great opportunity to discuss life expectancy and the risk of outliving one’s money. Explain how an annuity can provide a “retirement paycheck” for life and help protect their hard-earned savings from loss due to market downturns if an annuity might be right for their situation.

Instead of meeting twice a year to review their progress, meet every quarter or more frequently. That will help you stay connected over any progress or setbacks.

Two things you can do today

  1. Make a list of your clients who may need help budgeting their retirements.
  2. Review FA magazine’s guide to helping clients catch‑up.