Whether employees want their post-work years to include world travel or more time with family, everyone wants to enjoy a secure and comfortable retirement. Here are ways to better help them find the balance between the lives they want to live today with the life they want in retirement.
Offer longevity planning.
Based on the U.S. average, men are living an additional 17 years and women another 20 years beyond the typical retirement age of 65, according to the National Institute on Aging. These increased life spans mean that people today can expect to spend more time in retirement than previous generations did. As a result of living longer, they should also anticipate higher costs associated with long-term care.
Longevity planning helps mitigate the uncertainty of a person outliving their assets. Through these plans you and your employees can better anticipate the opportunities and challenges related to aging. Even if they are not in the best health, or if family history indicates they may not live longer, advisers who integrate health and wellness discussions can help your workforce better prepare for retirement.
Offer financial budget guidance
The amount of money a person needs in retirement may be greater than what they anticipated or saved for. Having a retirement budget can help avoid spending too much too soon, while strategies such as boosting pre-retirement savings or delaying government payouts can provide a nice buffer between spending income and saving early on.
Your employees will likely need to scale back on their previous lifestyle once they enter retirement to compensate for the increase in living expenses and rising inflation rates. For those whose spending threatens their retirement, their options are to stop overspending, compromise on retirement goals or work longer.
Offer income management advice
Helping an employee manage their income over the course of their life is important, but is even more important once they hit retirement. If at any time a person’s income streams produce more cash than they are spending, it may be wise for them to invest the excess cash flow to help meet their needs for future income and growth. In planning this way, consider using a “bucket approach” to allocate for different needs, including living expenses, short-term savings goals and emergencies.
If a person's retirement is being funded by their investments, encourage them to make conservative estimates of their nest egg’s earnings. Outline the benefits of letting asset allocation drive their returns instead of market timing, and urge them to monitor and rebalance their portfolio as needed.
While it’s easy for employers and their employees to find financial advice online, it’s a bit more difficult to find someone they trust and fully understands their financial situation. Help your clients achieve their retirement goals by anticipating their long-term goals and needs.
Disclaimer: This Retirement Goals Article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. If you decide to purchase or vary a financial product, your financial adviser, and other companies within the AMP Group may receive fees and other benefits. The fees will be a dollar amount and/or a percentage of either the premium you pay or the value of your investments. Please contact us if you want more information.
Jamie McIntyre of MAC Financial is an authorized representative and credit representatives of AMP Financial Planning Pty Ltd, AFSL and Australian Credit Licensee 232706
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