May 27, 2016
I must admit, I’ve always thought that preparing for a retirement and working with clients’ retirement was fairly simple, but as time has gone on the factors affecting retirement have become more complex for advisors and clients alike.
For most of us (including me), the idea of retirement has been focused on how we were going to spend our “golden years.” We looked forward to things like travel, more golf (even if it isn’t improving our game), time with our family and doing those things, like a better golf game, that we had always hoped to accomplish. When it came to planning for these “golden years”, the simplicity of it was founded in four basic planning factors:
A. Ensuring that we focused on accumulating some savings
B. Calculating our expected social security benefit
C. Verifying our company pension and on-going benefits
D. Being realistic with the downsizing of our lifestyles because retirement was different than living with children in our homes or when we were employed full-time.
Obviously, adding to the simplicity was, of course, our employer’s mandatory retirement age that helped many of us set a well-known and planned retirement timetable to the construction of our retirement plans.
But today’s world is more complicated than ever before. For many, the old idea of retirement, which was rooted in “simplicity” has been replaced by a new reality of anxiety and fear. When we look for the “cause and effect” of this new reality, there are many factors that have shifted. The simplistic approach has transformed into a more complicated one that requires sophisticated technology and tools for a more strategic and holistic planning approach.
I could list hundreds of factors to consider that ultimately leads to anxiety and fear – uncertainty in Social Security and of company pensions and benefit plans, inflation. Etc. – but the factors that have the largest impact on planning are those with a double edge sword for our generation and those ahead of us. This, in my opinion, is the advancements in technology that enhances medical research, but also increases the cost of health care because of what it accomplishes. Let me explain –
There is no doubt, we are living longer. In the 1930’s, the average life expectancy was around 62 years old. Today, according to the Social Security website the average 65 year old man will live to be 84. And the average 65 year old woman will live to be 86. The world is making great advances in technology and amazing advancements in medical research that are not only extending our life expectancy, but allowing us to live a more active life for a much longer. Because of these amazing medical advancements and better overall healthcare, people not only have longer lifespan, but higher quality of life in those additional years. Do while the person living to age 90 was at one point a rarity, it becoming more common today. This factor alone requires a more dynamic approach to retirement planning than in past years.
Whether you are trying to determine how much money you will need to fund retirement, or prepare for the increasing cost of healthcare, or simply trying to determine when to retire, we, at Gainplan are constantly re-thinking the old way to fit today’s times because we recognize that the retirement planning process is dynamic and on-going, so we need to be dynamic in our thinking and approach. Some things don’t change, as our dynamic and on-going process still considers things like income, expenses and overall cash flow, health care costs, the dynamic and goal-based investment approach that creates the right benchmarks, the goals around transferring wealth from one generation to another, and the emotional and psychological aspects of leaving the career which often defines us for those passions and people that deserve our time in the “golden years.” But the landscape has changed for many of us, but these are exciting times and we should not be filled with anxiety and fear. New technology has helped us not only live longer, but it allows us to plan more effectively. Our team stands poised, with incredible tools and technology, to work with you on the most effective and tax-advantageous strategies and tactics to draw income from qualified accounts, to optimize your Social Security benefits, and to develop a plan that transitions you from an accumulation phase to a distribution phase over time (whether for yourself or your loved ones).
One of the most important parts that have found is to stay adaptive. Healthcare costs, funding retirement, or simply trying to determine when to retire are all factors that are not written in stone. It is a process that takes time and is designed to carry people through their entire lives. While leaving a career that has defined someone for the past decades of their life can be an emotional process, anxiety and fear shouldn’t be one of those emotions. With this influx of technology, both medical and otherwise, these golden years should be a time to plan for and look forward too, not one to be worried about funding. That is where a good financial plan can provide peace of mind and the more secure future.
This commentary on this website reflects the personal opinions, viewpoints and analyses of the Gainplan LLC employees providing such comments, and should not be regarded as a description of advisory services provided by Gainplan LLC or performance returns of any Gainplan LLC Investments client. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Gainplan LLC manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.