If aging is the only way to live a long life, as one adage puts it, then clients need to think about the financial, physical and mental changes they will face in retirement.
Here are five things retirees should consider to stay one step ahead of the transition to come.
As retirement nears…
Assess true income needs. This Fortune article by Ryan Derousseau looks at research showing that an 80% replacement rate, which is widely used in financial services, can overstate the amount of savings retirees need by around 20%. The point: numeric rules–like accumulating enough cash to replace 80% of your pre-retirement income–may prompt clients to save more than they need.
Consider other factors that could stretch retirement dollars. Andrew Hallam’s Globe and Mail story tells the tale of several couples who have made the most of their retirement income by downsizing and opting to live at least part of the year in a low-cost locale. But as this Next Avenue article by Tess Vigeland makes clear, there are ups and downs to the expat life.
Once retirement comes…
Look at alternatives for generating consistent income. Time to start drawing down on retirement savings? Clients might want to look at the income-yielding alternatives that Andrew Walker lists in this article in the Motley Fool, including three monthly income stocks yielding between 4% and 7%.
Be aware of tax credits for retirees. Patricia Lovett-Reid, chief financial commentator for CTV News, makes the case that seniors are likely to spend more on healthcare as they age. The good news, she says: as medical costs rise, there are several often overlooked tax breaks that can help ease the pain for clients.
Determine what clients want in a seniors’ home. Most people don’t want to contemplate moving to a retirement or long-term care home until it’s impossible to avoid. But such facilities are changing along with their residents. Writing for the London Free Press, Hank Daniszewski chronicles the story of a London, Ont. retirement home where music students are living rent-free in return for providing live musical performances. And Andrew Lupton of CBC News points to a group of Ontario care homes that signed WeedMD as their preferred vendor of medical cannabis. Almost sounds like a return to the student years, doesn’t it?