piggybank-savingsThese days, retirement is on every boomer’s mind. And with good reason. With the economic meltdown impacting retirement savings, unemployment at a high water mark and Social Security and other government programs under pressure, your clients may be experiencing a trifecta of bad news.

Many pre-retirees are questioning whether they will ever retire.

Fortunately for your clients, you have probably been discussing their retirement income needs. You’ve helped them differentiate between their potential sources of income. You’ve looked at their guaranteed income – annuities, pensions… You’ve talked about non- guaranteed income – stock appreciation, dividends, interest… But, have you discussed what a “comfortable retirement” really means? Quite possibly that picture has changed dramatically from the picture they envisioned a year or more ago.

If you haven’t had that discussion, now may be the time for a “Retirement Income Reality Check”. (Click here to download a copy of a new letter that can be use with your clients and prospects.) Find out if their vision of a comfortable retirement has changed. Are their retirement assets aligned with their goals?

When you have this conversation, you’ll probably uncover one of three things:

  1. They will be relieved because they are right on track.
  2. They will be pleasantly surprised because they are ahead of projections.
  3. They will discover bad news because they are behind and need to “tweak” some of the variables.

If your clients fit into category # 1 or #2, you’ve provided a valuable client service. It’s a great opportunity to ask then for a referral!

If they fall into category #3, you (and your clients) have some important work to do. Here’s how you might go about it…

To get started, you need to be as specific as possible about their annual income needs. You should have them bring in their current budget so that you can see where their income is going now. As the famous Yogi Berra said, “If you don’t know where you are going, you will wind up somewhere else.” Likewise, you can’t plan for retirement income if you don’t know how much income they really need. Don’t have them “guesstimate”. Look at the hard numbers.

Now, I am not suggesting you become a budget counselor. But by pulling back the covers and looking at the numbers, you will discover what is important to them, and where the holes may be. Maybe something will stimulate a discussion about other topics that impact their financial well being…Long Term Care, for example. This may give you a cross-selling or up-selling opportunity.

$100 Budget Reduction Can Cut Retirement Savings by $25K

Recently I read a very interesting statistic. Every $100 in your monthly budget translates to $25,000 in retirement savings to support that cost. The premise behind this article was to find ways to slash costs from your budget so you won’t have to save as much for retirement. Think about this…$100 per month is $1200.00 annually…if your withdrawal rate in retirement is 5% (a little aggressive by some accounts) then you need to have $25,000 stashed away. In April, I refinanced my mortgage, at a monthly savings of over $200. Very simply put, this means that that my retirement savings goal just got reduced by $50,000!

I have been working in the retirement planning business for over 15 years and have never heard retirement income positioned this way. Imagine…if you plan to go out to dinner with your spouse once a month and spend $100, better have $25,000 saved up. If you could suggest a way to cut $100 from monthly retirement expenses, then what that really means to the client is that you have kept them from having to save an extra $25,000. How cool is that?

About the author: Roberta Eckert has over 20 years in the financial services business, primarily engaged in the sales, manufacture and distribution of investment and insurance products. She has served in a number of roles, including sales management, relationship management and wholesaling. Under her leadership, her sales teams have consistently exceeded sales goals.She provides marketing, coaching and training support to financial advisors and wholesalers, and is a experienced platform speaker at industry meetings, conferences and forums primarily in the area of retirement income

Roberta has degrees in Economics and German and holds Finra licenses 7, 24, and 63. She lives in Williamsburg Virginia with her family.

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