Last month I wrote an article for the web site stockmarkettoday.com. If you didn't have a chance to read it there, I have reproduced it here. Please feel free to click on the link to the site. It specializes in updated financial information every day that you may find valuable.
I receive lots of comments on posts and in e-mails about financial planning and decision-making. Preparing to live without a regular paycheck is a critical part of the preparation for retirement that every one of us encounters. It is a stage of life that most of us enter with more than a little fear. Over time readers have helped me develop a list of the top financial concerns that folks getting ready to retire, or who have just taken that step, are most worried about. What exactly are these investors looking for? There are six basic concerns that are addressed most often.
Understand our tolerance for risk and respect it: This is probably the most frustrating problem my readers continually bring to my attention. An investment or financial advisor who presents options that are simply not appropriate to the retiree creates tension and uneasiness. Even if an opportunity for a nice return may be missed, as retirees we have fewer opportunities to replace money that is lost. Accept what makes us comfortable and work within those parameters. Understand that a client will sometimes pass on what you believe to be a great deal. He isn’t rejecting your judgment; rather he is staying within his comfort zone.
Avoid Complicated Explanations: For most of us, the world of finance has become something akin to a foreign language. We grew up with some simple concepts: certificates of deposit and savings bonds. We understand the basics of stocks and bonds, mutual funds, maybe even ETF’s. But, when explaining a more complicated investment opportunity it is important to speak in a way that we don’t feel stupid or agree to something because we don’t want to ask too many questions. If an investment option is too complex to explain in simple terms, there may be problems.
How do we not outlive our money: Our biggest fear as retirees is that we will last longer than our money. Now matter how prepared we think we are, another major recession or serious health calamity is all that stands between us and a big problem. We are looking to for a plan that will do everything possible to protect our assets, while not violating our tolerance for risk.
Help us budget and simplify our lives: Understanding how to budget and save has allowed us to retire. But, now, what do we have to do? Do we live on 80% of our work income or is that more than we need to spend? What about expenses? What should we budget for after retirement? What categories are likely to increase and which ones fall? We’d like to simplify our lives by downsizing our housing, but is it best to rent or buy from this point forward? Leaving an estate for the children may be important. If so, what is the best way to set aside part of our money? Retirees want some input.
Bring us options and allow us to make the final decisions: Retirees often suffer from a feeling of loss of control and influence after leaving the workplace. It becomes quite important to these folks that they have the final say in how their money is invested. Bringing a client a few legitimate options and letting him make the final choice is a good idea.
Create a feeling that you care as much about our well being as we do: Everyone understands how business works: without a profit there is no business. But, some of the folks that contact me complain that the company they have put their trust in treats them like a number. Contact usually occurs only when a fee is being added or the government requires a privacy notice. These retirees are aware that they are not the firm’s only client, and most likely not the one that produces the most profit. But, in their mind their financial future has been put in the hands of a company or person. There is a definite need for a feeling that the individual matters, that his or her financial well-being is important.
Disclaimer: I was paid a fee to write this article for stockmarkettoday.com