Retirement Planning for Longer Life Expectancy

Baby boomers are living longer than previous generations. Data from article to article confirms this fact but questions the long-term quality of life of the aging population related to health and savings. Whatever the future holds for boomers, one thing is certain: A toppling percentage of the American population must prepare for greater longevity, as well as its risks and rewards.

Faced with this modern trend, many investment advisors are ill-equipped to adequately address longevity risks of a retirees’ income plan. Financial education and training received by many advisors is still rooted in 20th-century life expectancy data, resulting in outdated perspectives on retirement planning. Realizing the discrepancies between traditional retirement income strategies and a more contemporary approach that includes retirement income solutions accounting for people living longer, advisors are pursuing financial designations that teach new ways to create sustainable and optimized retirement income plans.

To help advisors adopt new retirement planning methods, The American College of Financial Services (The College) offers the Retirement Income Certified Professional® (RICP®) designation specifically geared towards deepening retirement-centric knowledge, skills and expertise. The RICP® program provides the knowledge to create an effective, long-term retirement income plan that includes strategic tactics like the ones below.

Monetizing Maturing Assets  

As retirees live longer, they face increased probability of being forced to take Required Minimum Distributions (RMDs), even those who’ve tried to hedge with a longevity annuity. For many retirees, the real investment complexities begin after the wealth accumulation phase as they try to convert those assets into a sustainable income stream that will outlive them (or at the very least, keep pace). A healthy portfolio should have a variety of investments with different maturity dates to prevent simultaneous maturation or illiquidity. Planned strategically, investments can be repositioned into new tax-deferred vehicles or dividends reinvested into high-performing plans. Maybe it’s time your clients start taking cash instead of reinvesting the entire sum? Courses offered through the Retired Income Certified Professional® designation focus on how to choose appropriate strategies for monetizing assets over the retirement period. You’ll also become more familiar with the latest research on strategies for ensuring that retirement assets last a lifetime or even beyond for your clients.

Delay Social Security Payouts

When Social Security was established in 1935, average life expectancy was only about 61 years. Now living well into their 80s, retirees must try to squeeze even more from these fixed benefits. If clients have other streams of revenue, it could make more sense for them to wait until full retirement age or even age 70 to take up to 30 percent more in Social Security benefits each month. Findings from the RICP® Retirement Income Literacy Survey conducted by The College found that many people are perplexed about when to claim Social Security and how to make the most of their benefits. As an RICP®, you’ll gain a better understanding of how Social Security fits into the retirement plan and the optimal claiming age appropriate for each client's situation. You’ll learn how to use Social Security as an important source of income in supporting a long-term retirement strategy.

Choose Optimal Retirement Age

Rather than retire at the traditional ages of 62 to 65, Boomers are working longer. Many simply aren’t ready to walk away from lifetime careers. Others aren’t sure if they have enough money to support them through the retirement years. With the RICP®, you gain the background to evaluate a client’s current situation relative to their retirement income needs and objectives. To maintain a certain standard of life over an extended number of years, a client may need to work longer to accumulate more retirement savings or just work part-time to cover specific expenses to delay Social Security. Understanding your client’s retirement goals and priorities, a RICP® can recommend steps, such as delaying retirement, in achieving them.  

Even as data points to longer life expectancies, most people underestimate the amount of time they are going to live. Many retirees contemplate only living another decade into the future and overlook critical risks and opportunities in the process. With the RICP® designation from The American College of Financial Services, you’ll understand how to best guide and advise your clients in retirement, addressing issues about Social Security, long-term care, housing as well as income taxes. You will know how to help clients make the most of their savings in a retirement that could extend into decades.  

Thousands of advisors are making the Retirement Income Certified Professional® designation a priority to elevate their retirement income expertise and ability. Learn more by downloading The Guide to Being a Successful Retirement Income Planner.