While your clients turn to you for financial advice, that doesn’t mean they aren’t seeking out information on their own, whether that’s from blogs, news reports or their peers. Though seeking to understand as much as possible about their finances in general and retirement specifically is admirable, there is plenty of misinformation available. Here are some of the myths your clients may have heard that you should dispel quickly:
High net worth individuals don’t need to worry too much about saving
If you have clients who are high net worth individuals, it’s very likely that they earned their wealth by being frugal and making savvy business decisions. If they have a diverse portfolio, they may feel comfortable about having enough funds to grant them a comfortable and pleasant retirement. While this may very well be true, work with your clients to make sure they have money dedicated to their retirement that can easily be liquidated when needed. Encourage them to set aside a portion of their investments that they cannot touch until retirement.
Retirement means living on a fixed income
While there are plenty of Americans who stop working all together once they retire and live off their retirement savings and Social Security, it seems that trends are moving away from that lifestyle. Increasingly, retirees are reentering the workforce, often in a different manner. Perhaps they want to try their hand at becoming a small-business owner or maybe they simply want a part-time job to keep up a routine and remain social. Whether your client needs the funds to help support their lifestyle or not, make sure they understand that just because they’ve retired from their career doesn’t mean they should expect to no longer earn an income.
They can just keep on working
For many people, the prospect of retirement in general is unappealing. The reality is that a large number of people – particularly those who have found great success in the business world – both enjoy their work and feel like it keeps them feeling youthful. The next logical step is for them to decide to simply not retire and continue drawing an income as long as they are able. The reality of the situation is that many people must stop working at some point, whether that’s because of health, mental or familial reasons, so it’s important to financially prepare to leave the workforce even if they have no intention of doing so.
$1 million plenty to retire on
If you have a high net worth individual who has set aside a relatively large-sounding amount of money for their retirement with the intention of living the life of luxury, make sure they are going into their retirement with their eyes wide open. Yes, $1 million is a lot of money – few would deny that. However, if your client retires at 65 or 70, chances are they have a good 20 to 30 years left. Is $40,000 or $50,000 enough for your client to not only live comfortably, but indulge in the kind of retirement they always imagined?
They need to make sure they can put their kids through school
While it is exceedingly generous for parents to make their children’s education a top priority, it can also be foolhardy. Even if your clients don’t necessarily have to pick either saving for college for their kids or saving for their retirement, be sure they are putting a greater emphasis on the latter. Remind them that their children can always apply for loans and scholarships, and they will have no such opportunity when it comes time to retire.
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