I’m a financial planner and I do 3 things with every client to make sure they can retire exactly when and how they want

The author, financial planner Martin A. Scott.Martin A. Scott
  • As a financial planner, help clients achieve retirement is a key part of my job.
  • To get them there, I start by factoring inflation, investment returns, etc. into my projections.

Regardless of their age, nearly all of my clients (and potential clients) said that one of their main goals was to prepare for a secure retirement. Since most of my clients are in their 30s and 40s, they don’t know exactly when they want to retire because that event can potentially happen in 25 to 30 years. However, there are still many financial planning value to offer clients as they progress towards their retirement goals.

Here are three ways to guide clients and help them stay on track as they build retirement wealth.

1. I make reasonable assumptions in the pension plan projections

As part of their service to clients, most advisors use some type of financial planning software, which has a feature that provides retirement plan projections (eg probability of success). Often, an advisor will show a client the projections based on what the client is currently doing and then show how the projections will improve with a recommended change (e.g. client increases pension plan contributions, client works more hours). years, etc).

An advisor must make several assumptions when performing this type of analysis for a client: investment performance on a client’s portfolio; future inflation rates; level of social security benefits; and the length of a person’s retirement (i.e. how long they will live). My main rule of thumb in this area of ​​planning is to strive for a very conservative attitude with these assumptions, which can provide clients with a more realistic picture of what to expect in the future. Consider the following example.

John and Mary are both 40 years old and have been married for 10 years. They have two children and are making efforts to save for future school fees, but also want to prioritize their own retirement planning. They hire a financial planner to do a detailed analysis of their retirement plan. In these projections, their advisor specifically assumed below-average investment returns (for their risk tolerance in their investment portfolios) and above-average inflation rates, both of which had a negative impact on their progress towards their retirement goal. Therefore, this analysis encouraged John and Mary to make more of an effort to save more for retirement in order to counter these types of potentially adverse situations while achieving their goals.

2. I help clients understand that there will be constant changes in the future

Providing pension plan projections to clients is a prudent exercise and provides them with great value, but every number and assumption that goes into this type of analysis will inevitably change. Moreover, the level and timing of these changes are simply unpredictable. It can be frustrating for clients and advisors, but that’s the reality of financial planning.

There will be quantitative (eg, tax laws, market volatility) and qualitative (eg, personal circumstances, health) changes in the years approaching retirement, especially when the time horizon is long . I encourage clients to understand that nothing is set in stone and to remain flexible, which will allow them to adapt to the changes they will face in the future.

3. I ensure that clients have the appropriate wealth protection

Assurance This may be the least discussed strategy in retirement planning, but it’s the most important. Having the right insurance in place ensures that retirement goals will not be derailed in the event of an unfortunate event or circumstance.

Over a long horizon of 25 to 30 years, many kinds of things can happen. Life can take many twists and turns. Maintaining adequate wealth protection — in the form of insurance — is clearly a prudent decision, but it can also provide peace of mind to someone who knows their overall financial plan can withstand adverse events. The following example shows the impact of a heritage protection vehicle.

Mike and Beth are both in their late 40s and have been married for over 20 years. Their son, Joe, has just graduated from college and they have fully funded his tuition for him for the past four years, which is quite a financial feat. In addition to no longer having tuition payment obligations, Mike and Beth also maintain large retirement accounts, which will allow them to retire early.

One evening, Mike has a car accident and is at fault. The person in the other car is seriously injured and sues him for a substantial sum of money, which can pose a real threat to the couple’s overall savings. Mike is found liable in court, but luckily Mike and Beth took their financial planner’s advice and purchased an umbrella insurance policy, which provided them with the additional liability coverage needed in this situation. As a result, they were able to retain their retirement savings and continue to move towards their goal of early retirement.


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