Are Boomers Ready for the Retirement Boom?

In their lives and jobs, Baby Boomers have left incredible marks on history. Now, on the eve of mass retirement, Boomers are poised to make history again as America plays host to more retired citizens than ever before. As such, retirement planning for Boomers is crucial, and there are a number of things financial advisors can do to help this demographic.

1: The dangers of debt

The typical dream of retirement is that it's a time free from worries, concerns - and, with any luck, debt. However, that's increasingly not the case: in 2012, the percentage of retirees in debt rose to 44 percent ... a 14 percent increase from 1998. Because retirement is already a delicate game of allocating the funds of a fixed income, an important part of financial planning is helping Boomers put away enough money to settle the monthly payments of these debts as well as their standard living expenses.

So critical is the issue of retirees living in debt that the Department of Labor has proposed changes to the fiduciary rules under the Employee Retirement Income Security Act to add another layer of security to Boomers as they plan for the future. While currently not law, the proposed Conflict of Interest Rule, Retirement Investment Advice will require pension advisors, broker-dealers, and insurance agents to follow more stringent standards in retirement planning to ensure best return on investment for retirees. These new rules will further ensure that retirement planners are working to Boomers best interest and avoid bad investments that can lead to debt. Read our post to find out more: DOL Proposed Fiduciary Rules Highlight Need for Retirement Income Education.

2: Social Security is still alive

While dishing about the dangers of debt, there is a bit of good news advisors can offer Boomers regarding retirement planning: they will benefit from Social Security. There's a lot of cynicism regarding social security, and while it's true that the trust funds that help pay for it will be depleted by 2034, numerous changes are being made to continue this venerable program. The debate on maintaining social security is also a hot topic among presidential candidates.  Much discussion underlies the importance of maintaining this important benefit to retirees. With funds holding steady through for at least decade, the truth is that most Boomers on the cusp of retirement should not worry about losing any Social Security benefits.

3: The need for wellness programs

One of the most understandable concerns that Boomers have about retirement is their health. After all, what is the use of solid retirement planning without having the good health to benefit from it?  To reduce the burden of healthcare expense, financial advisors may urge Boomers to identify plans that offer insurance incentives for participation in wellness programs. Often, monetary contributions or service discounts are awarded to individuals that maintain healthy lifestyles or achieve healthy behavior goals (smoking cessation/weight loss). Ultimately, this is a "win/win" for Boomers as they get an opportunity to drive insurance costs down at a time when the budget is of major concern while also kickstarting or maintaining healthier lifestyles that ultimately reduces their need to pay for healthcare services.

4: The importance of self-education

At a time when the new DOL rulings put pressure on brokers and insurance companies to further educate their associates in delivering adequate fiduciary care in retirement planning, financial advisors can take the lead to encourage their own clients to educate themselves on different retirement scenarios.  (A recent survey of Retirement Income Certified Professionals (RICP®) conducted by the American College found that 99% of respondents said that the industry would be better off if more advisors earned the RICP®. Additionally, 99% of respondents stated they did a better job for their clients after receiving the RICP® education.

In choosing the best retirement investment strategy for their lifestyle, Boomers should understand the differences in plans by seeking out their own information. Using various online and offline resources, as well as information provided by advisors, Boomers can research what they need to know before tying into a long-term decision.  This has two main benefits. First, it helps establish trust between Boomer and advisor when you encourage them to independently verify information. Second, it empowers the Boomer. At a time when it's easy for them to feel helpless about changes in life and lifestyle, this lets them feel in control of something important.  After all, knowledge is power. It also ensures the investment advisor that their clients thoroughly understand investments so there are no questions, confusion or fall out later.

As you can tell, Boomers have a special set of variables that apply to them, and they’re not the only group. To learn how you can help Boomers develop a sustainable retirement income plan, be sure to download The Guide to Being a Successful Retirement Income Planner.

Now is the time to also learn more about the The Perfect Storm: An Aging America and the Department of Labor Conflict of Interest Rule by watching the webcast by Craig Lemoine, PhD, CFP® Director of the Center for Financial Security at The American College of Financial Services.