Helping Retirees Prepare To Dodge ‘Curve Balls’

By Cyril Tuohy

InsuranceNewsNet

Financial advisors need to help pre-retirees and retirees secure peace of mind by preparing them for the “curve balls” that life after work is likely to throw their way, according to a trio of retirement and wealth management experts.

In particular, financial advisors can help clarify much of the confusion surrounding Social Security, health care reform and living through retirement, these experts said.

“Most people understand that retirement planning is not a ‘once and done’ proposition,” David Tyrie, head of personal wealth and retirement for Bank of America Merrill Lynch, said. “Where guidance is needed most is helping people understand how all of these variables and decision work together over time.”

Tyrie was one of three experts to speak during a webcast in the wake of the release of the 2013 Merrill Lynch Retirement Study titled “Americans’ Perspectives on New Retirement Realities and the Longevity Bonus.”

The nationwide survey was conducted in partnership with Age Wave and collected answers from more than 6,000 respondents age 45 and older. 

Survey participants indicated that they were more interested in securing peace of mind in retirement than simply accumulating as much wealth as possible, Tyrie said. This presents a big opportunity but also a complex challenge for advisers who need to know the financial details and family dynamics of their clients.

Well-to-do retirees today are paying for their grandchildren’s education, for example. Others are moving back in with their children in the “in-law suite.” Still others continue to work part-time, even as they incur high health care costs because of a chronic condition.

For some, retirement expectations have been scaled down, and that’s just fine. A worker approaching his or her golden years today is content to play top-tier golf in New Jersey rather than fulfill a dream of playing the top golf courses around the world, the experts said.

In sum, the picture of the retirement demographic uncovered by this survey paints a far more complex picture of today’s retirees living a more “fluid” lifestyle than previously thought.

“The idea of working a few extra years or cycling between work and leisure has gone from being outlier to a core assumption,” Andy Sieg, head of the Global Wealth & Retirement Solutions unit at Bank of America Merrill Lynch, said.

Retirees today want a retirement that is in some way connected – to family, to work, to love, to hobbies, to extracurricular pursuits. Yet, they will also have to face high health care costs, depend more on Social Security and prepare for contingencies that they thought might never come.

As a result financial advisors will need to listen closely and match new products and services to those needs.

“They don't want financial advisors to talk to them about jargon,” Ken Dychtwald, chief executive officer of Age Wave and an expert on population aging, said. “They want to understand what this is all about.” He called today’s retirees a “guinea pig generation” with regard to longevity.

In the past, retirement meant the end of work after a long period of wealth accumulation. Today, the picture is more muddied, with retirees balancing their leisure time with periods of work or helping grandchildren with major expenses.

Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He has also written about food, restaurants and travel. He can be reached at [email protected].

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Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at [email protected].