I’m Retired. Now What?

It’s one thing to retire; it’s another to be in retirement. This list will help your clients understand what’s at stake.

By Helen Thompson

The client in front of you is on the doorstep of a whole new phase of life: retirement. He’s dutifully planned for this moment, accumulating assets and making sure the money’s all there. How can you help make his dreams come true?

Chris Hill, CSA, regularly tackles this problem for two kinds of clients. “One group is the one nearing retirement: the one who gets there the right way, and once he’s there, he’s getting the right amount of income,” says Hill, a financial advisor at First Financial Group in Reston, Va. “The other is the person who comes in when he is 65 and says, ‘I have a million dollars, and I need to start taking income. What’s the best way to do that and where do I get the most income, growth potential, tax efficiency, safety, control and access while I still have something to pass along to my children?’”

Hill, a member of Northern Virginia AIFA, educates everyone he works with by giving them a handout that summarizes the six predators that are after their money—taxes, inflation, longevity risk, interest rate volatility, stock market volatility and withdrawal pressure—and the nine things they should demand from their money.

Spell it out
Hill’s list itemizes the nine areas clients need to address when they are planning a retirement-income strategy. By spelling them out up front, clients are aware of what you want to do for them. “I tell them that I will design an income strategy that hits all nine of these buttons,” says Hill. “This is what I know that they can and should demand, and I’m going to come through and follow through to create a retirement income for them.”

The Nine Demands

Growth potential: This one is in the bank: Everyone wants to see his assets grow. Balancing it against the other demands on your money is the real challenge.
Safety provisions: Everyone loves a healthy stock market and low interest rates. But if there’s a crash, rates go through the roof or taxes change significantly, you’ll have a back-up plan so that nothing can destroy your plans.
Tax efficiencies: In an ideal world, you’d pay as few taxes as possible to get as much income as possible.
Income you cannot outlive: Retirement used to last five to 10 years. Now, it’s a new phase of life lasting two, three or more decades for many people.
Income growth potential: It’s OK if you’re on a fixed budget. But there are always surprises and emergencies. Things wear out and have to be replaced, and there’s always inflation.
Maintain control: You don’t want to put your money into a product that promises an income as long as the money belongs to the company. You get to decide where and when your money is invested.
Maintain access. Your income is fine right now, but what if a year from now you decide to tour the world or buy that boat? You should be able to gain access to all of your money if you need to or just want to.
Full transfer to beneficiary: Regardless of how you set it up, when your timecomes, you don’t want to leave a penny on the table for anyone but your beneficiaries. And you want to leave as little as possible to Uncle Sam, no matter how much you like him.
Professional supervision: The right financial professional can help you by managing the process—all the little tweaks, adjustments and balancing acts—to make sure everything stays on track. And you get to enjoy the benefits of your money—and your retirement.

The biggest challenge in retirement-income planning is hitting these nine items. but if you can promise and deliver on them, you’re golden. Keep this list handy when your clients are ready to talk about retirement-income planning. You can download your own copy of “The Nine Demands.”

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