This article is the second in a series focusing on funding life in retirement.

As the responsibility for funding retirement shifts from governments and employers to individuals, advisors can provide added value to clients by providing clarity around how to prepare for post-career life. The following five principles can serve as a great starting point for successful retirement planning.

#1 – Determine Retirement Spending Requirements
It is important that advisors and their clients have an honest conversation about what annual spending requirements will be as they move into retirement. Spending priorities such as housing, healthcare, family responsibilities, insurance, and taxes should be given top consideration. Moreover, lifestyle preferences such as travel plans, club memberships, and hobbies should also be taken into account. Clearly-established financial priorities are a valuable component of achieving a successful post-retirement plan.

#2 – Match Retirement Funding with Expenses
The term “retirement income” is a misnomer. The key challenge of retirement planning is how to fund both short-term and long-term expenses. Organizing commitments into “must haves” and “nice to haves” can help simplify the process of prioritizing spending behavior. The primary goal for financial advisors and their clients is to match funding with spending needs on an ongoing, sustainable basis. This funding can include revenue from investment savings, Social Security, pensions, and other sources.

#3 – Plan for a New Set of Risks
In retirement, heightened fear of losing money is one of the greatest challenges  investors face. This worry can make it more difficult to keep emotions out of investment decisions. In addition to traditional risk1 considerations, retirement plans should consider additional risks such as longevity, inflation, and the sequence of investment returns.2 Bearing in mind a range of risks can help clients guard against outliving their assets or losing the capability to maintain a desired lifestyle.

#4 – Minimize the Impact of Taxes
In cases where an investment portfolio is a primary source of cash flow, an effective tax strategy is essential. Financial advisors and their clients can work with a tax professional to help ensure maximum tax efficiency. A comprehensive tax plan should specify which account(s) to redeem first in the effort to utilize and maintain a tax efficient approach to retirement funding. This requires factoring in taxable accounts, tax-deferred IRAs, Roth IRAs, required minimum distributions or earned income.3

#5 – Stay Engaged and Flexible
For advisors and their clients, establishing a retirement funding plan and post-career financial goals is an ongoing process. It requires the flexibility to adapt to changing interests and unplanned events such as a health issue or longer-term care needs. The most effective retirement funding plans have the capacity to adapt as life changes.

Getting innovative, getting inspired
U.S. financial advisors report that the service 77% of their clients want most is retirement planning.4 This desire is indicative of the increasing weight of responsibility investors are feeling around retirement and financial planning for their post-career life. It is a great time for investors to clarify how they can prepare themselves for the long-term and a great moment for advisors to add value by providing a forum for conversation and ideas about the broad range of investment options that are available.

Watch Ed Farrington, Executive Vice President of Retirement, discuss the challenges advisors and their clients face as they work to achieve retirement security.



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1 All investing involves risk, including the possible loss of principal.

2 “Longevity” or longevity risk refers to the risk that an investor will live longer than expected and exhaust their retirement savings. “Inflation” or inflation risk refers to the risk that an increase in the general prices of goods will decrease the spending power of an investor’s retirement savings. The term “sequence of investment returns” refers to the risks that an investment account or accounts does not provide income within the timeframe most suitable to the investor.

3 The term “taxable accounts” refers to accounts that present an investor with tax liabilities. A tax-deferred IRA is an individual retirement account in which an investor can potentially grow savings tax-free until the time of withdrawal. A Roth IRA is an individual retirement account in which contributions are made with after-tax dollars and withdrawals are generally considered tax-free. The term “required minimum distribution” refers to retirement accounts from which an investors is obligated to make a particular annual withdrawal from. The term “earned income” refers to an investor’s taxable income.

4 Natixis Global Asset Management, Global Survey of Financial Advisors, September 2014. Survey included 1,800 financial advisors in 10 countries.

This material is provided for informational purposes only and should not be construed as investment advice. The views and opinions expressed above may change based on market and other conditions. There can be no assurance that developments will transpire as forecasted.

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