Recalibrating Retirement: Advisors Must Shift Gears

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As a baby boomer myself, perhaps I’m prejudiced, but this generation of mine has always had an outsized impact on the U.S. economy. From Beatlemania to the housing boom, boomers have always tended to do things en masse and to Brobdingnagian effect.

Now we’re starting to retire, and the implications will be huge. Boomers control over 80% of personal financial assets and more than half of all consumer spending. They buy 77% of all prescription drugs, 61% of over-the-counter drugs and 80% of all leisure travel.

If you’re a financial planner who’s constructed your practice around advising my generational brethren on preparing for retirement, you will have to make some serious adjustments, as your AUM is about to go into reverse. The millennial generation now outnumbers us boomers, who today make up less than 25% of the U.S. population. But my generation still accounts for at least 45% of Americans with investible assets of at least $1 million; almost half of those with $5 million or more, and more than 60% of those with $25 million or more.

In other words, replacing our aggregated wealth as we begin to spend it down will prove a true challenge for the wealth management industry. Think of it this way: if you’re living to 95 or 100 — no longer an uncommon event — then by the time you die, your children may have already retired!

That puts planners in a triple bind. On the one hand, the first question a boomer client asks, “Do I have enough money to retire?” becomes much more difficult to answer. On the other, replenishing the assets that we will withdraw from our accounts as we move deeper into retirement is also a huge challenge.

And yes, there is a third hand in this instance. Failing to adequately address the possibility of infirmity in old age and the need for help with basic activities like dressing and eating — can bankrupt a family, but traditional long-term care insurance falls short of many clients’ requirements.

This month’s special report on retirement addresses all three challenges.   

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Practice management Retirement planning Financial planning