While we all recognize the concept of retirement has changed, perhaps it’s time to start changing conversations to incorporate a focus on life planning versus just retirement planning to help and encourage people to better prepare financially for all their life stages.
Funny thing about this life journey we’re all on in that there are lots of twists and turns along the way … and there’s no longer a specific sequential order — meaning we may revisit some of these stages more than once. Additionally, there are a number of new trends occurring within some of these life stages that is not only extending them, but also making them more complicated, and more expensive, which ultimately requires additional financial preparation.
For example, have you heard of the American family bank — where the majority of American families are supporting adult children, grandchildren, parents, siblings — it’s all over the place. Another new trend is Grey Divorce — where we’ve seen a 50% increase in divorce rates over the age of 50 in the last twenty years! The good news is, they’re getting remarried — the bad news is they’re getting remarried, which adds another layer to people’s financial responsibilities. Or what about the grandparents who hope to contribute to their grandchildren’s college fund … little did they know, in many cases they probably are the college fund! Which has created a whole new epidemic in that the 65+ population is the #1 demographic group in default on student loans!
Clearly it’s time to rethink the strategy and discussion of retirement planning to that of life planning, in order to better prepare and serve people for the reality of what this new longevity revolution is creating. Some foresight thinking financial companies are training their advisors and/or bank personnel to focus client/prospect conversations based on where people are in their life stages … and where they’re heading versus just using the generic ‘retirement planning’ that is non-relatable to many.
When we talk about the idea of Life Planning conversations, it likely encompasses many of the same issues addressed in retirement planning, yet in perhaps a little different way. For example, some of the life planning topics would include aspects of longevity – where people are in their life stage, and how long they will likely live; financial issues would also be addressed, along with health, future life stages and what lies ahead, residence as to where and how people want to live in retirement, and reinvention to address what people may want to do with their lives.
Bottomline, life planning provides a more holistic approach to address retirement and financial issues – and particularly with regard to financial it’s important to remember that the majority of people view money and finances as very complex – which explains why the majority procrastinate over financial matters. Therefore, by coming at these issues from a different angle like life planning, it’s more likely to engage and connect people versus turning people off by leading with finances and retirement.
Additionally, according to a recent IRI (Insured Retirement Institute) SmartBrief study, 85% of financial advisors believe life/longevity planning is an effective way to both attract and retain clients.
So as we start the New Year, perhaps a fresh start to address this all important topic of financial/retirement planning through life planning would be beneficial to both the general public and the industry as well.