Most of us don’t think about retirement. Often until it’s too late.
A recent report by the Carson Institutional Alliance said that the average amount of thought that 49% of non-retirees gave to retirement planning was “Little to None.” Only 16% of respondents said they gave retirement planning a “Fair amount” of time.
An Opportunity to Inform
Equally as worrisome – or an opportunity to educate, enlighten, and edify if you’re an RIA or financial advisor who markets your practice to pre-retirees – is that merely 11% of pre-retirees thought of retirement issues a “High Amount” of the time.
Of the generation closest to retirement (ages 55 to 64) who have at least thought of retirement issues:
Nearly one-fourth expected to still be working past age 65.
18% planned to retire from their full-time career and begin a new part-time job.
9% thought that they would start their own business.
Only 18% harbored the idea that they would retire and work no more.
Expenses May Go Up, Not Down, In Retirement
Advisors know this, but advisees may not: when people retire, their expenses will not likely go down. Well, perhaps true, if their house is paid off, or close to it. The same could be true for college expenses for the children. (Unless, of course, the kids have moved back home, or started graduate school, or both.) Expenses for business commuting, clothes, and dry cleaning will probably go down as well.
However, the cost of health care, health insurance premiums, and prescription medicine may increase during retirement. As could discretionary cost for travel and entertainment, and non-discretionary property taxes increases.
Then there’s the hidden tax of inflation. Inflation erodes the value of money over time. For example, $10,000 in today’s dollars would have the buying power of only $5,900 in 20 years if inflation averaged just 3% per year.
Your client’s transition from a leather desk chair to a comfortable deck chair can be helped with your active involvement, planning, and advice. Too many people are unprepared for retirement. That’s what an advisors’ got to do with it.