Couple hiking on a grassy path near water during their retirement

Retirement Questions for Financial Advisors

A significant part of helping clients retire is navigating your client’s many concerns and questions about exiting the working world. Although the prospect of retirement is often an exciting time, it can also be filled with uncertainty and worry. This is especially true in times of economic turmoil. For example, CNBC reported that 401K balances fell 23% in 2022, which halted many individuals’ retirement plans. Additionally, a recent survey found that 63% of Americans are worried about having enough money to enjoy retirement. 

When discussing retirement problems and solutions, it may be tempting to stick to the spread sheets and ignore the emotional challenges of retirement. But the best retirement financial advisors know that retirement planning requires a lot of patience, empathy, and problem solving. It’s important to treat each question and concern delicately, and take the time to listen to your clients before offering solutions. Most often, clients simply need someone to be there as they process the next phase of their life.

To help you gain insight into how your clients are thinking and feeling about retirement, Life Settlement Advisors compiled a list of simplified answers to the most common financial advisor questions.

  1. What Is Retirement Planning?

This is often the first, and most important, question your customers will have. Your client is likely to have done their own research before coming to you, but scanning various retirement advice columns and crunching numbers into a retirement calculator will only get them so far. Naturally, it’s your job to explain the nuances of retirement and thoroughly analyze their unique situation. How you approach this question often sets the tone for how your client chooses to navigate the retirement process.

 Here are the most important points your client should understand about retirement: 

Retirement Planning Has Many Moving Parts

Retirement planning encompasses all investment, saving, and fund distribution strategies. This includes:

  • Setting aside the correct amount of money for retirement
  • Accumulating the most profitable assets
  • Navigating the distribution phase after paid work ends

There’s No Need to Panic

Everyone knows it’s ideal to start planning for retirement as soon as possible. However, if your client is a bit behind in their savings, it’s critical that you encourage them not to panic. Any little bit counts, and calmly navigating them through the savings process without disparaging their current financial situation is essential for future success. 

A Retirement Plan is Constantly Evolving

The retirement planning process does not stop after a person exits the workforce; even after your client stops working, their plan will need to adapt as their circumstances change. For example, if your client needs money for an expensive surgery or if they simply want to take a vacation abroad, alternative methods for generating cash flow—like selling a life insurance policy—will need to be explored. 

Discipline Is Important

Ultimately, the goal of retirement planning is to help your clients secure enough money to maintain their lifestyle, even when paychecks stop coming in. And this requires significant discipline. Most retirees need 80% of their income at retirement. For example, if your client currently makes $60,000, they would need to have enough saved up to produce $48,000 a year for approximately 20 years. This figure also depends on your client’s lifestyle and current spending habits. 

Discussing Retirement Can Be Emotionally Difficult

As their advisor, you should prepare your client to have tough conversations about finances. Most retirees are not saving anywhere near enough to meet recommended benchmarks, which means you are required to offer suggestions for cutting back on spending. 

1. What Should I Consider Before I Retire?

Although considerations and recommendations for retirement are highly individualized, there are common points of interest that should be discussed with any client. Here are a few examples:

  • Conducting a comprehensive audit of your client’s current financial situation
  • Discussing how much money your client will need to live off of during retirement, and setting a provisional retirement budget
  • Helping your client navigate and understand Medicare and Social Security 
  • Creating an emergency fund that is separate from your client’s other retirement assets 
  • Evaluating your client’s current assets and liabilities 
  • Helping your client navigate home equity loans and lines of credit 
  • Navigating the estate planning process and developing a strategy for shielding their estate from taxes
  • Maximizing your client’s retirement plan for tax efficiency 

2. What Are the Signs That You Should Retire?

Some clients may be hesitant to retire, which is entirely understandable. Aside from financial anxieties, people spend most of their lives working, and transitioning to a more slow-paced lifestyle can sound unappealing to some. This often causes people to keep working, even if they don’t want to. If your client seems uncertain, here are some of the most common signs they may actually be ready to fully or partially retire. 

  • They’ve eliminated most of their debt
  • They’ve experienced negative changes in their health 
  • They’re feeling burnt out and disinterested with work 
  • They have no desire to advance in their career or pursue continued education
  • They want to spend more time with loved ones and friends

3. What Are the Challenges of Retirement?

Although retirement is a welcomed relief for many, it can be challenging for your clients to transition to this new phase of their life. Understanding the hurdles and difficulties your clients are faced with is the most important aspect of retirement planning. Approaching these challenges with actionable solutions and empathy will always get your client the best results.

Here are some obstacles that often get in the way of a happy retirement: 

    • Difficulty Eliminating Debt: If your client still has a mortgage, credit card debt, and other outstanding loans, you’ll first need to strategize how to consolidate and pay down that debt to facilitate a stress-free retirement.
    • Lacking a Savings Plan for Maintaining a Steady Income: Setting aside a consistent amount of money every month can be difficult for people as unexpected costs pile up. Helping your client set up reliable investments for a rainy day, and educating them on reasonable budgeting best practices often helps mitigate this issue.
    • Affording Expensive Healthcare Costs: As people age, the cost of healthcare increases. In addition to helping your client navigate Medicare, you should encourage them to bulk up their emergency savings accounts so they can quickly access funds if a costly health emergency arises. 
    • Planning For Higher Inflation and Other Macroeconomic Shocks: As an advisor, most of the nitty gritty planning falls on your shoulders. However, it’s important to remember that your clients watch the news and see their retirement accounts falling in value. In these situations it’s best to remind your client that markets naturally fluctuate and help quell their fears surrounding economic instability. 
    • Navigating Taxes: Making strategic withdrawals select tax free investments are both significant challenges when managing taxes on a fixed income. Most of these stressors can be resolved by sitting down with your client and taking some time to clearly explain the intricacies of managing taxes during retirement.
    • Understanding Required Minimum Distribution (RMDs): Calculating rates and getting ahead of the RMD calendar can often be difficult for retirees to understand. The substantial penalties that come along with making mistakes with RMDs are also a source of stress for most retirees. Similar to taxes, meeting with your clients to explain how RMDs work is often the best way to manage these concerns. 

4. How Long Before You Retire Should You Notify Your Employer?

Most workplaces require people to provide at least six months notice before a person can retire. It’s also worth noting that discussing retirement with an employer makes many people feel uncomfortable. If your client is preparing to exit the workforce soon, they may look to you for advice. Here’s how you can go the extra mile for your clients: 

  • Help them research their company’s retirement policies
  • Help them draft an exit email or letter
  • Help them decide if they want to stop work entirely or partially retire

5. What Are 5 Key Tips for Retirement Savings?

  1. Don’t Do Anything Without a Plan: As a financial advisor, making a plan of action for your client’s retirement is a top priority. This involves outlining their savings timeline and strategy, as well as determining their ultimate savings goals and addressing potential roadblocks.
  2. Select the Most Advantageous Retirement Accounts: Understanding which types of retirement accounts make the most sense can be very stressful for your clients. Take the time to answer all of their questions about each option and offer them as many resources as you can find. Additionally, ensure that your client understands how important it is to have an emergency fund that can be easily liquidated if they need money immediately.
  3. Regularly Review and Adjust Investment Strategies: As the market fluctuates, adjustments will need to be made to your client’s investment strategies. Be sure to offer transparency and clearly explain your approach to prevent unnecessary worry.
  4. Budgeting is Key: Help your client workout their monthly budget plan and encourage them to set up automatic deductions. This keeps everything on track and prevents people from forgetting to set money aside. Your client should expect you will check in to address any changes they are experiencing in their lifestyle and spending habits. Ensure they understand that even the smallest change could affect their overall savings strategy.
  5. Pursue Alternative Sources of Funding: It’s important for your client to understand that 401ks, Roth IRAs, and high-yield investment accounts aren’t the only methods to save for retirement. For example, it might make sense for your client to pursue a life settlement and sell their life insurance policy. Oftentimes, life insurance premiums become a burden for people living on a fixed income. Selling a life insurance policy eliminates this extra cost, while the payout from a life settlement can supplement a client’s retirement cash flow. Additionally, because life insurance companies allow policyholders to divide their policies into separate parts, your client has the option to sell a portion of their policy, if they do not wish to sell the whole thing. However, this only applies to policies with a death benefit of $100,000 or greater. 

Here are some additional reasons why a life settlement would be a good option for your client: 

  • Selling a life insurance policy gives your client a large lump sum of cash. Although the dollar amount depends on your client’s specific policy, a life settlement payout ranges from 10% to 25% of the policy’s death benefit amount.  
  • Not having to pay premiums saves your client money each month. 
  • It is possible for you and your client to arrange an agreement where they can retain a portion of the death benefit.  
  • Although a life settlement payout is less than the policy’s death benefit, life settlements provide a significantly greater profit compared to a policy’s surrender value. 
  • Life settlements require no out-of-pocket costs to you or your client.

Discover how a life settlement can help your clients experience the full rewards of retirement and get in touch with Life Settlement Advisors

Did you know you can sell all or a portion of a life insurance policy, even term insurance? Selling an unwanted life insurance policy is no different than selling your car, home or any other valuable asset that will create immediate cash. Contact us today to learn more.

Get in touch with Life Settlement Advisors today to take the first step toward converting your policy into cash.
Life Settlement Advisors
Leo LaGrotte
At Life Settlement Advisors, we strive to be a voice of confidence and assurance for our clients. Our goal is to educate you about the life settlement process so you can make an educated decision about whether it is right for you.