SAN DIEGO - As retirement planning continues to change rapidly, advisors' interest in the issues surrounding aging has never been greater.
Indeed, when creating a plan for aging for their clients, advisors at TD Ameritrades national conference were urged by Michael Finke, professor and director of retirement planning and living at Texas Tech University, and one of the countrys most renowned retirement experts, to keep the following concepts in mind:
Satisfaction is important. Not surprisingly, Finke's research confirms that having more money brings more satisfaction in retirement, underscoring the need for savings and prudent investing.
But less obvious is the importance of couples being able to get along and enjoy their increased time together during retirement, Finke said. Couples should practice being retired, he advised, taking long vacations and spending more time together. Why spend all that time and effort planning around money for retirement if you dont have a satisfying relationship with your spouse?
One of the least satisfied cohorts in retirement, Finkes research found, were couples who lived within 10 miles of their children.
Cognition is critical. The risk of dementia doubles every five years after age 65, and the older people get the more their financial literacy declines even though they still express confidence in their abilities.
Theres a big risk that older people will make bad decisions as a result of cognitive decline, Finke said. In fact its as high of a risk as a bad portfolio decision later in life.
Longevity is increasing. A 35-year old client will spend five more years in retirement than someone who is 65 years old now. A 30-year timeline for retirement planning may not be reliable anymore, especially with gains in longevity in higher-income Americans, Finke said.
Indeed, Finke presented research showing that people with more money live longer than those with less. In addition, the longevity gap between men and women is narrowing as men are living longer.
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