Here's the plan: Work 40 years, contribute to a company-sponsored 401(k) plan, retire and begin a life of leisure.

Now, here's how it actually works: Start planning that golf-game-filled retirement at age 61, take a look at that 401(k) statement and realize that those savings won't come close to covering the cost of living another quarter century, let alone even basic healthcare. Then, scrap those plans, and perhaps start thinking about career number two.

Welcome to the real world, retiree.

"A lot of people don't understand the risks of living longer," said John C. Walters, president of the U.S. wealth management group at Hartford Life. Retirement is much longer, involves different responsibilities and is a far more expensive phase for Americans today than a generation or two ago, he said.

And as the nation's 77 million Baby Boomers approach retirement, companies like The Hartford hope that as they roll their money out of mutual-fund-heavy workplace retirement programs, financial planners will steer Boomers to annuity products like theirs to help ensure they don't outlive their money.

With products as complex as annuities, it's that link between the product producer and the financial adviser that is key, said Mike McLaughlin, a manager with New York based consulting firm kasina. "It's not the nuances of an individual product," he said. "If the financial adviser doesn't have a great grasp on the magnitude of this challenge, everyone is done."

First and foremost, financial planners must be able to explain to their customers why living in retirement is different than preparing for it.

"It's not about how to save. It's about figuring out how to live," said Joseph F. Coughlin, founding director of AgeLab at the Massachusetts Institute of Technology. "Longevity is something we all strive for, but are not preparing for," said Coughlin, a guest speaker at "The Future of Longevity," a recent webinar jointly presented by MIT and The Hartford.

For one thing, whereas retirement used to be a decade or so of golden years, it's now more likely to be two or even three.

For another, families are not having frank talks among themselves, or with their financial planners. Mainly, that's because people are too busy, or too uncomfortable to talk about their own mortality, and especially the mortality of a spouse or loved one.

Such conversation may be taboo, but it's essential, said John Diehl, a certified financial planner and vice president specializing in retirement solutions with The Hartford. "Financial advisers have a responsibility to raise these questions, or they are doing their clients a disservice," Diehl said. Only after those questions are asked, and answered honestly, can real planning begin, said Maureen Mohyde, director of The Hartford's gerontology group.

Couples should consider at least three possible contingencies, which Mohyde refers to as the "ABC Plan." In one scenario, both husband and wife die at the same time. In another, the husband outlives the wife, and in a third, the wife outlives the husband. Then, those approaching retirement should look at each possibility honestly, based on family health histories and cold, hard actuarial statistics.

Devising such an ABC plan will help couples feel more comfortable, and can help financial planners retain clients for life. Statistics show that the majority of widows switch financial planners within three years of their husbands' deaths. Planners can avoid losing that business by ensuring that the man and wife both feel involved and aware throughout the retirement planning process.

For women, retirement can be especially risky. Women tend to outlive their husbands and often spend between eight and 10 years alone. And although their income typically drops to half of what it was, expenses typically decrease by only 20%, Mohyde said.

Furthermore, as Baby Boomers are living longer, so are their own parents. Three-quarters of the time, the woman will be the one to care for her own ailing parents or in-laws, often passing up promotions at work, or taking time off. Both scenarios mean forgoing income, and lessening, if not completely suspending, contributions to 401(k)-type plans.

With the modern family no longer concentrated in one geographic area, caretakers may not have the social network those in generations past did. Caring for one's parents may mean either moving closer to them, or hiring someone else to help. Women typically will spend their own assets before tapping into whatever assets their ailing parents may have, Diehl said.

After caring for their own parents, women often also care for their spouses, statistics show, or pay for someone else to help, Walters said.

And then there are the children; they keep coming back. Boomers' children often "boomerang," returning home to live after college, rather than moving out, thereby subtly keeping household costs high.

Not only is retirement changing, but the age of retirement is shifting, too.

"Adding income is a very, very meaningful part of retirement planning," said Ben Stein, economist, author, Hollywood personality and guest of the Hartford.

Eighty percent of those over the age of retirement still work, and the number one reason is to increase income, or retain benefits such as health insurance, according to Coughlin. At the same time, companies increasingly offer incentives to older employees to continue work as consultants, in an attempt to retain their institutional knowledge. The result is a multigenerational workplace that must be flexible enough to cater to all of employees' needs and schedules.

As Boomers shift out of their mutual-fund-heavy 401(k) plans, companies like The Hartford are hoping that their financial advisers will encourage them to shift their assets into various annuity products designed to help address the concerns surrounding retirement. Products range from complex income streams, which begin paying out once a retiree exceeds a certain age, to more straightforward policies, such as long-term care insurance.

"It's the messaging that's so important," Diehl said. "You've got to make it simple to explain." Rather than getting into of how such insurance products work, he said, "Get them to understand, What does this product do for me.'"

(c) 2006 Money Management Executive and SourceMedia, Inc. All Rights Reserved.

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