Are your clients prepared for retirement? According to the U.S. Federal Reserve's report on the financial wellness of Americans, more than a third of non-retirees said their retirement savings were on track. Tౠhis marks a substantial drop from five years earlier when the figure was almost 40%—already worrisome.

Unsurprisingly, preparedness varies significantly by age. Only 26% of adults under 30 think they're on pace with retirement savings, but the numbers are striking for those closing in on retirement: Only 38% of those aged 45 to 59 and 45% of those 60 and over think they're prepared. Racial disparities persist, with about one in four Black and Hispanic non-retirees saying they're on track. And just 11% of non-retirees with disabilities say their retirement savings are on track.

These statistics reveal wider societal issues worth consideration by policymakers and community stakeholders. But as a 澳洲幸运5官方开奖结果体彩网:financial advisor, you know the crucial role you play in helping clients assess their retirement readiness and get on track. By asking the right questions, you can guide them to create a realistic retirement plan and make better financial decisions. Let's explore the most critical🍌 retirement questions to discuss with clients during your next meeting.

꧅1. What Does Your Iಌdeal Retirement Lifestyle Look Like?

This is an excellent time to have your clients dream big and visualize what they want to do once they retire. This could include traveling, moving to a different location, doing charity and community service work, or any number of other activities. Some clients may even want to quit their jobs to start a business, taking up a passion they've long had.

Clients and their financial advisors need to understand how much their desired retirement lifes꧋tyle will cost. While there are general rules about the percentage of preretirement income people spend in retirement, 澳洲幸运5官方开奖结果体彩网:everyone is different.

In addition, retirement spending is not linear. The early retirement years tend to be more active, with increased expenses for activities like travel. However, these costs typically dip as people age. The best approach is to have clients create a detailed 澳洲幸运5官方开奖结果体彩网:retirement budget, helping them along as they consid🅺er🗹 these questions:

• Where will they live?
• Do they want to downsize (or even upsize) their homes?
• What do they plan to do for 澳洲幸运5官方开奖结果体彩网:hobbies and activities?
• Do they have other major plans for retirement?

T✅he statistics below show that, for many, there will be a lot of work to do to prepare for these plans.

2. How Will You Fund Retirement?

澳洲幸运5官方开奖结果体彩网:Financial advisors can help their clients 澳洲幸🍌运5官方开奖结果体彩网:un🐟derstand the financial resources available to fund their retirement. While most non-retired adults (72%) reported having some form of retirement savings in 2022 (the latest information available), 28% have none at all. Among those with retirement savings, tax-preferred accounts like 401(k) or 403(b) accounts are the most common in 2023, with about 61% of non-retirees participating.

These findings underscore the crucial role you play in helping clients understand their retirement options. By discussing the relative benefits of different savings vehicles and designing a plan that aligns with their specific goals and needs, you can significantly improve your clients' retirement preparedness and overall 澳洲幸运5官方开奖结果体彩网:financial well-being.

The U.S. Federal Reserve report also serves as a reminder that you may often work with those with little or no retirement savings in place. Given the disparities across diverse characteristics, you'll also want to be attuned to each client's specific circumstances. No longer do the bulk of financial advisors mostly serve wealthy clients. This has made financial advising more complex, but helping clients who thought retirement wouldn't otherwise be possible is among the most rewarding aspects of this work.

Initiating conversations about rꦇetirement planning early on can help identify gaps and ensure clients take full aಞdvantage of their investment and savings options. Here are some of the forms of savings Americans report having:

• 澳洲幸运5官方开奖结果体彩网:Annuities
• Interest in a business
  
• Pensions, including those from old employers
• Retirement accounts, such as individual retirement accounts (IRAs), 澳洲幸运5官方开奖结果体彩网:401(k) plans, 澳洲幸运5官方开奖结果体彩网:403(b) plans, and other workplace retirement plans
• Social Security
• 澳洲幸运5官方开奖结果体彩网:Stock options or restricted stock units from their employer
• Taxable investment accounts
  

There could be other financial assets available for retirement. The key here is to help clients determine what type of ongoing retirement 澳洲幸运5官方开奖结果体彩网:cash flow their financial assets will generate. This is also an excellent time to run financial planning projections to help determine how much income can be supported and for how long. Given increases in 澳洲幸运5官方开奖结果体彩网:life expectancy, projections out to at least age 100 are prudent. This is hardly hyperbole. According to U.S. federal actuaries, men and women retiring in the mid-2020s at 65 can expect to live on average an additional 19 and 22 years, respectively. Given medical advances, it's no surprise that those numbers are expected to increase in the coming years for each new cohort of retirees, nearing 25 years beyond 65 for those in their mid-20s today.

To confirm clients are well prepared for retirement, ideally, you could begin discussing retirement with them at least 10 years before their planned retirement date. Starting early, you can revisit and refine the client's retirement plans as their target date approaches. This also allows more time should adjustments be needed if the projected retirement cash flow won't support your client's desired lifestyle. Options to consider at this point might include:

• Working a bit longer
• Working part-time in retirement
• Reducing anticipated expenses
• Saving more in the remaining years until retirement

The more time you and your client have to plan, the broader your choices for making the strategic changes that align with the client's long-term financial goals.

3. Which♒ Retirement Accounts Will You Tap First?

For clients with several retirement accounts, deciding which to use first is critical, though the answer may change over time as their situatio꧃n evolves. While some retirees automatically withdraw from accounts with the lowest tax bill first, this may not always be the best strategy for everyone.

Clients younger than the age for 澳洲幸运5官方开奖结果体彩网:requir𒁃ed minimum dis🌌tributions (RMDs) may benefit from tapping tax-deferred retirement accounts, particularly if their income is relatively low and they have room for more income within their present tax bracket. This approach can also help reduce their future RMDs, which is favorable if they don't need the additional income.

Of course, things can change from year to year, so you should help them reassess their distributions at least annually. For example, if clients have high medical expenses that allow a portion to be tax-deductible, they might consider withdrawing more from their 澳洲幸运5官方开奖结果体彩网:tax-deferred accounts since the medical deduction can offset the taxes due on these distributions.

4. When Will You Take Social Security?

Deciding when to claim Social Security benefits is a critical question for retirees. Eligible clients can start receiving benefits as early as age 62. However, waiting until the full retirement age (FRA) of 66 and two months (or 67 for those born in 1960 or later) results in a benefit about 30% higher. 澳洲幸运5官方开奖结果体彩网:Delaying until age 70 increases the benefit by about another 32%. Not only are benefits higher, but any cost of living increases will be higher, as they are based on the higher benefit amounts.

For those who are working, any income over the 澳洲幸运5官方开奖结果体彩网:Social Security minimum limit will result in a $1 cut in benefits for every $2 in income over that threshold. This restriction goes away once you reach the full retirement age.

Married couples may have additional claiming strategies available to them, depending on their specific situation. In someಞ cases, it can be worthwhile for one spouse to claim benefits early while the other delays—or for both to delay benefits if they have enough income from other sources.

5. How Will You Pay for Health Care?

Healthcare costs are a significant portion of retirement expenses for many Americans. However, companies offering retiree medical benefits are becoming increasingly rare. According to the Kaiser Family Foundation, the percentage of large firms offering retiree health benefits dropped by nearly a quarter, from 29% in 2020 to 21% in 2023. The likelihood of having ꦍaccess to such benefits is higher for clients who worked for larger firms, with almost half of companies employing 5,000 or more workers offering these plans.

To avoid running out of money in retirement, clients have to 澳洲幸运5官方开奖结果体彩网:account for their medical costs. One strategy for funding retirement healthcare costs is a 澳洲幸运5官方开奖结果体彩网:health savings account (HSA) if the client has access to one through a 澳洲幸运5官方开奖结果体彩网:high-deductible insurance plan, either on their own or from their workplace. These accounts allow tax-deferred contributions and tax-free withdrawals for qualified medical expenses.

Ideally, clients will contribute to their HSA while still working, using out-of-pocket funds to cover any preretirement 澳洲幸运5官方开奖结果体彩网:medical expenses. This approach allows the HSA balance to grow tax-free, providing a dedicated fund for Medicare supplements and other 澳洲幸运5官方开奖结果体彩网:healthcare costs in retirement. Retiree medical costs must be factored into your ﷽client’s retirement plans, or else they could find themselves doomed to run out of m꧂oney.

The Bottom Line

As a financial advisor, you play a crucial role in helping clients navigate their financial lives. By starting📖 off with the right retirement prep questions, you can help ensure they are well prepared for the financial challenges and opportunities ahead.