The uncertainties your clients face in retirement can erode their sense of confidence. Indeed, according to the 2017 Retirement Confidence Survey by the Employee Benefits Research Institute, only 18% of retirees say they are “very confident” about having enough assets to live comfortably in retirement. Almost 40% were either “not too confident” or “not at all confident.”
Today’s retirees face two overarching uncertainties. While each on their own can lead even the best-laid strategies to go awry, it’s important to remember that remaining flexible and responsive to changes in the landscape may help you meet their challenges of uncertainty in the years ahead.
Uncertain Tax Structure: A mounting national debt and the growing liabilities of Social Security and Medicare are straining federal finances. How these challenges will be resolved remains unknown, but higher taxes—along with means-testing for Social Security and Medicare—are obvious possibilities for policymakers.
Whatever tax rates may be in the future, taxes can be a drag on your clients' savings and may adversely impact their retirement security. Moreover, any reduction of Social Security or Medicare benefits has the potential to place a further strain on their retirement.
Consequently, you’ll need to help them be ever mindful of a changing tax landscape and the strategies to manage its impact.
Market Uncertainty: If you know someone who retired, or looked to retire in 2008, you know what market uncertainty can do to a retirement blueprint.
The uncertainties haven’t gone away. Are we at the cusp of a bond market bubble bursting? Will the Euro Zone find its footing? Will U.S. debt be a drag on our economic vitality?
Over a 30-year period, uncertainties may evaporate or resolve themselves, but new ones historically have emerged. This means understanding that the solutions for one set of economic circumstances may not be appropriate for a new set of circumstances.
Helping your clients plan for their retirement and how to navigate these uncertainties is a valuable resource you can provide. Preparing for uncertainties is less about knowing what the future holds as it is about being able to respond to changes as they unfold.
The Circle of Wealth® has many tools to help you communicate strategies for planning for retirement.