Keeping clients on track with retirement savings plans

Keeping clients on track with retirement savings plans


Today’s upcoming retirees face many demands on their personal finances, and they’re often torn in numerous directions. They may be gearing up to help their kids fund college or perhaps trying to get that mortgage paid off before reaching the years of retirement bliss. Whatever the case may be, it’s important for financial advisors to keep clients on track when it comes to saving for their future.

While personal accountability remains an important factor in reaching retirement readiness, it’s often not enough. In fact, recent research from the Employee Benefit Research Institute found that just 17 percent of workers are very confident in their ability to live comfortable in retirement—meaning many workers need some outside help to successfully prepare for their future [1]. And as a professional financial advisor, you’re in the perfect position to help.

Tips for helping clients stay on track for retirement

Globally, workers expect they’ll need approximately 68 percent of their income to live comfortably in retirement. It’s good news that workers have a rough estimate of their necessary income replacement, but the good news seemingly ends there. Just 25 percent think they’ll actually achieve this level of income in retirement, and even scarier, 13 percent expect to only achieve ¾ of the income they’ll need to survive in retirement [2]. Yikes. Luckily, financial advisors may be able to help reverse these trends and get workers on track to reaching their retirement goals.

· Clearly determine retirement goals

While many workers dream about the day they can hang up the towel for good, most people haven’t really put too much thought into what retirement will actually look like for them. And as the Cheshire Cat once said, if you don’t know where you’re going, then it doesn’t matter what road you take to get there. Having direction is paramount to retirement planning, and workers need to have a clear vision of what their desired retirement experience looks like before a successful savings strategy can be put into place.

· Create a written savings plan

Once your clients have clearly identified what their desired retirement lifestyle looks like, it’s time create a written savings strategy to help them get there. And the “written” part is very important. A recent study conducted by Charles Schwab found that while only one in four workers have a written financial plan, those with such a plan in place exhibit better investing and saving behaviors [3].  

Develop attainable savings goals, like setting aside 10 percent of income for retirement or cutting back on unnecessary expenses, that will lead to a growing nest egg. Help clients identify milestone savings goals—and encourage them to celebrate appropriately when those milestones are met.

· Build a safety net

Your written financial plan likely includes automatic payroll deductions to your client’s retirement account with specific, pre-determined allocations going to stock and bond investments. But the stock market is unpredictable, so it’s important that clients—especially those who are getting close to retirement—have an adequate cash reserve to fall back on as a safety net. Clients with an emergency fund covering up to six months of expenses will face less stress in an economic downturn or from unexpected job loss than those without, with enough cash saved to cover rent or living expenses, groceries, car payments, and the like until the market recovers or a new job is found.

Using your tools and experience as a financial professional to help clients determine their goals, assess their financial condition, and prepare a written savings plan can enhance the probability that they will achieve the retirement they’ve always envisioned—which is the whole goal of financial advice after all, right?