Planners can prove their worth if they find ways to lessen the chance that their clients will not outlive their retirement funds. David Blanchett, director of consulting and investment research for the Retirement Plan consulting Group of Unified Trust in Lexington, Ken., on Friday detailed how planners can implement sustainable withdrawal strategies so that retirement income works for their clients.

When modeling probable success rates of a client's portfolio, planners must also include any potential impacts of risk so the client has a fuller picture of how their decisions will impact their retirement income years down the road, said Blanchett, speaking at FPA's annual conference in San Diego.

"You will negatively affect their lifestyle if you're being too safe or if you're too aggressive with your success rate," Blanchett says.

Planners should recommend that clients change their annual withdrawal rates depending on the stage of retirement. There is the "Go-Go" early stage, in which retirees tend to maintain their previous lifestyle and perhaps increase their traveling. During these years, clients may want to take out more money to get the full advantage of their vitality.

Then as retirees enter the "Slow-Go" stage, generally, between the ages of 70 and 84 when their bodies tell them it's time to slow down, their budgets tend to decline 20% to 30% and withdrawal rates on their retirement portfolios should reflect that.

In the "No-Go" stage after the age of 85, there are significant changes in lifestyle which are generally brought on by health issues. Retirees may consider changing their withdrawal rates again depending on medical expenditures.

Elizabeth Moore, conference attendee and client services manager at Advisor Financial Services LLP in Woodstock, Ga., says that she, too, recommends that clients change their withdrawal rates depending on their activity level and health issues.

To combat longevity risk on clients' portfolios, Blanchett recommends that planners generally work on the assumption clients could live for another 35 years after retiring at age 65. While his internal research has shown that the probability that each partner of a couple will live to age 90 is 42%, it might be safer to plan for them to live until 100 -- even though the probability of them doing so drops to 3%.

"By creating that 35-year period, you're going to reduce monthly income per year for that client," Blanchett says, though clients can offset that if they save more during their working years.
Planners might consider recommending annuities, but should analyze the effective cost of each product over the long term to determine the best deal. Clients might also opt for an annuity product with a Guaranteed Minimum Withdrawal Benefits rider or a managed payout fund.
Planners must also not forget to factor in their fees over the longterm, which could impact withdrawal rates, Blanchett says.

Perhaps most importantly, planners should periodically revisit the performance of their clients' portfolio to determine if withdrawal rates and asset allocations are adequate, he says.
"With revisiting, the chances of success increases dramatically," he says.

Lisa Kirchenbauer, president of Omega Wealth Management in Arlington, Va., says that while she has not sold insurance products since her license expired years ago, she is realizing that there are a fair number of low-cost providers that could help her clients.
"I need to take another look at annuities as part of my clients' retirement strategy," Kirchenbauer says.