For many, retirement is a chance at a new life of self-fulfillment and active leisure. As the average life span increases, however, new financial challenges emerge.
The MIT AgeLab works with financial planners and others to advise older adults how best to plan for the golden years. Planners need to focus on laying the groundwork for a financial cushion and life's unexpected events.
Financial planners should make sure their advice meets the following criteria:
Realistic: A financial plan should account for housing, transportation and caregiver salaries.
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Relevant: It should spark conversations and plan for what is important in the person's unique situation.
Responsive: It should include discussing their plan with family and planner. Make clear to all parties the strategy in place to navigate these years, including how Social Security and long term care may factor into the picture.
Historically, an investment adviser gives current advice to clients of all ages. A financial planner is an investment adviser who focuses on clients' accumulating assets, not outliving their income, and then passing assets along to their beneficiaries by will or trust.
The planner looks at the big picture and tries to develop a comprehensive financial plan to guide clients through life's journey. Some planners allow you to continue working with your current investment adviser while the planner builds your personal plan for a fee.
The plan gives guidance for your journey through life. The plan may include staying in your home or a retirement center, assist
ed living, an Alzheimer's facility, or skilled nursing center.
What's your plan for the journey? I'm sure you've thought about it, but may not have done anything about it yet.
Meanwhile, the MIT AgeLab says financial planners should give more guidance, both verbally and in writing, toward more complex topics frequently referred to as longevity retirement planning.
With Alzheimer's disease and dementia on the rise, and baby boomers rapidly approaching old age, individuals and families need to rethink retirement planning. Financial planners should be ready with workable strategies.
Are you ready to enjoy your older years to the fullest, knowing you and your family are secure financially? The MIT AgeLab has developed three questions that may predict your future quality of life.
Who will change the light bulbs? This sounds simple enough, but if your father is 85, do you want him on a ladder changing light bulbs? How about your mom who's living alone when a water pipe breaks? What is your plan for their, or your, home maintenance?
How will you get an ice cream cone? Do you have adequate transportation to go where you want when you want? Or are you forced to rely on friends to take you?
Who will you lunch with? Lunch is more than a meal; it's an occasion to see people on a regular basis. It helps reinforce a healthy and active lifestyle. Today, more than 40 percent of women over 65 live in isolation in the United States. This is debilitating and can lead to depression.
There are a million other questions that can be asked. I certainly don't have all the answers, but it's up to you to start thinking and acting, because it's your family's future style of life at risk. I've heard plenty of times that your friends and family will be your caregivers. Have you ever been a caregiver? Do you want to volunteer to do it again? This task requires a very special, qualified person.
Effective financial planning must be more than guaranteed lifetime income and just a listing of your stocks and bonds and the investment adviser's recommendations to buy/sell.
The new face of retirement planning goes further, adopting an integrated approach to prepare people to live life longer and to live it well. Raymond James and I stand by the firm's motto of "Life Well Planned."
This written lifetime plan comprises many pages and is monitored and altered when needed. I design for clients a comprehensive financial plan that mixes the three MIT AgeLab questions and others to arrive at a longevity financial plan. At Raymond James, I call it goal, planning, and monitoring.
Only with your longevity financial plan in place are the investments then considered in order to provide the confidence that the plan will work. Do the plan first and the investments second.
Ensure that your plan takes what really matters into account, and then live life to the fullest.
Partner with a planner who takes you through the day-to-day necessities for personal happiness. If you have a plan, review it, or I'll be glad to review it for completeness. A second opinion may be helpful considering how complicated all this is.
James "Jim" Zientara, branch manager, financial planner, and registered investment adviser representative with Raymond James Financial Services Inc., can be reached at 941-750-6818 orraymondjames.com/4women. Any opinions are those of Jim Zientara and not necessarily those of RJFS or Raymond James.