(4 Minute Read)
As an advisor, you’re faced with the financial integrity of your clients and making sure they’re making educated decisions for their futures. If you have many clients heading toward, or are already in, retirement, it’s vital that you provide them with the best advice on their financial strategic planning. When reviewing finances, make sure your clients aren’t making any of these four common mistakes that can derail their planning.
They Are Stagnant in Planning and Preparing for Retirement
It’s easier to ignore retirement than to face it head-on with a saving strategy. A lot of folks would rather spend time planning something else, like a vacation or home renovation project. This is because retirement represents a long-term financial burden along with the enjoyable parts. However, leaving your head in the sand doesn’t help seniors overcome that financial burden. In fact, the longer they avoid planning for their retirement, the more it costs them in the end.
Don’t let your clients push off retirement planning just because it makes them nervous. The best thing you can do as an advisor is to make sure they are talking about their finances and future plans both openly and often in order to put them in the best place for retirement down the road.
They Don’t Consider the Impact Health Care Costs
Health care costs are rising, which means retirement savings need to rise too. That concern is coupled with the fact that many seniors simply aren’t educated about just how much health care costs as they grow older. Even if they are aware, some remain unconcerned because they assume that their health insurance and Medicare will cover all their costs. In reality, most seniors today can expect to spend somewhere between $266,000 and $394,000 out-of-pocket for health care during their retirement. As your clients begin to plan their budget and retirement withdrawal rates, make sure they’re anticipating how much health care costs will impact their retirement finances.
They’re Not Utilizing All Their Assets
A common mistake that many seniors make is not fully recognizing, and therefore not utilizing, all of their available assets when creating a financial strategy for their retirement. Homes, cars, and jewelry are among the most common assets that everyone is familiar with. However, seniors might be missing out on incredible opportunities if they aren’t aware of opportunities around other assets, like life insurance policies.
Bringing your clients value means utilizing all of their assets to put together the best, most lucrative financial strategy possible for them. If your clients have any life insurance policies that are no longer needed or wanted that they are thinking about letting go, they might consider selling all or a portion of their life insurance policy(ies).
Case Study
Mr. Jones purchased a term life insurance policy to ensure that his wife and children had replacement income in the event of his untimely death. Mr. Jones has since retired and the mortgage has been paid off. Mr. Jones was going to let his policy lapse until he learned that he could sell it. Mr. Jones received $89,500 for a policy that he would have otherwise received nothing for had he let it lapse.
They Maintain a Certain Disposition About Retirement
Planning for a financially sound retirement isn’t easy—it means a lot of savings effort over a long period, and what’s worse, the outcome isn’t always guaranteed by just that hard work of saving up. Unexpected costs could still arise. This leads to many seniors thinking that they will need to continue working in some fashion after they retire to fully fund their expenses. On the other hand, many seniors feel very optimistic about their retirement, even if they haven’t adequately prepared for it.
As an advisor, it’s important that you keep your clients level-headed about what they can expect and how they should prepare for it. You can outline their financial situation and show them an estimated look at what they’ll need to live the retirement they have in mind. Ask deeper questions about their wants, needs, and expectations, and be prepared to juggle those with the realities that they face.
At Life Settlement Advisors, we take pride in being able to help seniors as they make important decisions about their futures. Life settlements can provide a very real opportunity to pad your clients’ retirement nest eggs, which can enable them to grow their investments, or simply be able to live a little more comfortably during their retirement years.
