Longevity brings expanded role for financial advisors

Key Points

  • As lifespans get longer, people are spending more of their lives in retirement. Retirement planning needs to adapt to this new reality.

  • There are four phases to life after retirement, but they're not a steady progression. Some clients move forward and back through the phases multiple times in their lives.

  • Longevity planning is an opportunity for advisors to invite important conversations and develop nuanced plans that help clients age on their terms.

Lifespans have risen steadily since the mid-19th century. Today, the average 60-year-old American can expect to live 20 or more healthy years.1 Millennials can expect to live well into their 90s and children born today are very likely to reach 100 years old.2 Yet, many people underestimate longevity.1

Living longer means clients will need more retirement savings to maintain their standard of living and keep up with medical expenses. It also means that amid the twists and turns of a longer life, their needs and goals could change.

As their advisor, you have an opportunity to help them understand and plan for multiple phases of retirement. With a longevity planning framework, you can work with clients to plan a financial future that's resilient and responsive to what comes next.

From retirement planning to longevity planning

Joseph F. Coughlin, founder and director of the MIT AgeLab, believes longevity trends will require a fundamentally different approach to retirement planning.

Client goals and preferences are likely to evolve significantly over decades of life after retirement. Longevity planning is about building in the flexibility for clients to use their money and time to find more opportunities to ask: What's next?

Essentially, says Coughlin, longevity means advisors and clients will need to work together to create a deeper, more comprehensive vision of retirement. Armed with those insights, advisors can then identify the products and services to best support this vision as it grows and changes over time.

"Asking a 45-year-old what they're going to be doing in retirement is like asking an 18-year-old what they're going to do in their midlife crisis," says Coughlin. They're going to need you to help them envision their best life in retirement, not just at age 65 or 70, but for decades.

Thinking about retirement as phases can help clients get more specific about what they want from retirement. Here are the four phases the MIT AgeLab has identified in its research.

The four phases of retirement

MIT AgeLab has found that retired clients can be grouped into one of four phases.3 The phases aren't a tidy progression. Many people move back and forth over time. What's important is understanding how well-being, physical health, and social connections change in each phase and how a client's financial plan can help them adapt and make the most of those periods in life.

The four phases include:

1. Honeymoon: Your clients may continue to work in a scaled-back capacity after retirement or launch a new business. In general, new retirees stay active and involved. You can help clients understand how continuing to work may affect their retirement savings, when and how much to withdraw over time, and how to manage their social security benefits.

2. Big Decision: As clients shift away from work, they increasingly focus on where they want to live and with whom they're spending time. This is a phase when goals can change drastically and when clients may want to strategize with you on how their money can help them live their best life.

3. Navigating Longevity: Health can be unpredictable. Most people don't expect to get sick or to have to manage a long-term health issue. Yet, for many people, health challenges dominate the third phase of retirement. As new realities emerge, you can help clients plan for medical expenses and check in on their goals. With your expert guidance, they can feel more confident in their ability to face uncertain times.

4. Solo Journey: As we age, partners and family members pass away. The solo phase of retirement may feel boring and lonely. However, money creates opportunity and often it's helpful to remind clients that their retirement savings can help them reconnect with old friends and form new relationships. For each client, how they approach this journey is different, but as their advisor, you can help them continue to plan for a life well lived.

How to navigate the conversation

As you begin working with clients through a longevity framework, the first question to ask them is which phase they see themselves in right now. You might have your own observations but if a client disagrees, you may have trouble offering advice that they find useful, so it's helpful simply to ask.

Next, it's useful to think through what each phase might look like. Post-retirement careers, continuing education and training, new living arrangements, potential health risks, bucket-list items—there are a lot of questions to consider. The better you can understand what clients might choose in each phase, the more you can do to help them keep their options open.

A conversation about longevity can also help clients anticipate changing realities. For example, a client might be expecting to receive help from their adult children, only to find out their children are not able or willing to provide the kind of support the client wants.

Money, health, and relationships are complex topics that can be uncomfortable to talk about. Longevity planning gives you a way to help clients feel in control and supported as they face some of the best and most difficult years of their lives. It also reinforces the value you provide as someone who not only understands money and investing, but who can help them work through complex issues now and for decades to come.

What you can do next

If you custody with Schwab:

  • Address your clients' changing financial needs with open-architecture financial solutions from Schwab.
  • Consider a custodian that invests in your success. If you're thinking about becoming an independent advisor, contact us to learn more about the benefits of a custodial relationship with Schwab.


1 "Retires Are Underestimating How Long They Will Live," The Hill, July 3, 2023, https://thehill.com/business/4076702-retirees-are-underestimating-how-long-they-will-live/
2 "We'll Live to 100 — How Can We Afford It?" World Economic Forum, 2017, https://www3.weforum.org/docs/WEF_White_Paper_We_Will_Live_to_100.pdf#page=4
3 "8,000 Days Workbook," MIT AgeLab, 2017, https://agelab.mit.edu/static/uploads/8000_days_workbook.pdf.

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