Longevity planning: Help clients envision new retirement realities


MIT AgeLab founder reveals how longevity is changing the rules of retirement planning—and what advisors can do to get their clients focused on planning.

Key Points

  • New trends in longevity are dramatically changing how retirees navigate their golden years. To maximize success going forward, advisors will need to fundamentally rethink how they engage with clients to develop plans that reflect a new, deeper, and more comprehensive vision of retirement. Dr. Joseph F. Coughlin, founder and director of the MIT AgeLab, recommends six key action steps to cut through the noise and stress—which cause many clients to tune out their advisors on crucial retirement-planning issues—and get them to re-focus and take action.

Americans are living longer than ever, and that will mean big changes for both retirees and the financial advisors who help them plan for their golden years.

Average lifespans have risen steadily since the mid-19th century. And now the trend of increasing longevity is beginning to accelerate like never before. Going forward, advisors' clients will live longer in retirement than previous generations, and they'll also enjoy better and more active lives during those years. Coughlin points to some eye-opening data:

  • Americans have 20 healthy years of life after age 60, on average.
  • The fastest-growing population segment is the 85-plus age group.
  • Half of the babies born in wealthy nations today will live to age 100, if current life expectancy trends hold.
  • Some research suggests that 142 years will be the "new normal" life expectancy in the future.
  • One-person households are the fastest growing—with 43% of women over 65 today living solo.
  • Nearly one-third (30%) of couples over 65 now live without their children nearby.

Given these trends, a key question must be asked: How will these developments impact the ways advisors help clients both plan for retirement and navigate their way through golden years that may last for decades?

From retirement planning to longevity planning

Coughlin believes that longevity trends will dramatically change the way retirees live—requiring a fundamentally different approach to retirement planning going forward.

Specifically, he sees retirement planning evolving into something much bigger—longevity planning—that not only considers the amount of money retirees need but also plans for how their goals and preferences will evolve over many decades. Issues such as post-retirement careers, continuing education and training, and living arrangements must increasingly become part of the advisor-client dialogue, as longer lifespans give retirees more opportunities to ask, "What's next?"

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

The challenge: Engaging with multiple generations of clients

Of course, to engage in deeper conversations about longevity and retirement, advisors first need to get their clients' attention and get on their agendas.

Here again, longevity trends create some interesting challenges when it comes to engaging with clients about crucial retirement-planning issues.

Thanks to rising life expectancies, many advisors going forward will likely serve a broad mix of clients of diverse ages—all of whom need to be planning to varying degrees for their eventual retirements. For some of those client segments, retirement will be a top-of-mind concern. For others, the idea of planning for an event that is decades away will have no sense of clarity or urgency. Or as Coughlin puts it, "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."

What's more, each generation has its own distinct opinions, preferences, and communication styles, making it even tougher for advisors to get through to their diverse mix of clients.

The common thread: Everyone is part of "Generation Stressed"

These major demographic differences mean it's unrealistic for many advisors to adopt a multi-pronged strategy for working with clients of different generations. Indeed, Coughlin calls such an approach too costly and "sloppy."

Instead, he says, advisors should focus on the generations' shared traits that they can leverage to get clients' attention, start conversations, and move forward with key planning strategies.

It turns out that all the different demographic groups have one important thing in common: They're all extremely stressed out.

  • The vast majority of Americans (70%) say they regularly suffer physical symptoms due to stress, and 66% report stress-related emotional symptoms.
  • Boomers, Gen Xers and Millennials all report experiencing unhealthy stress levels, consistently and over long periods.

Indeed, high stress is so pervasive that Coughlin says the three diverse demographic groups can be merged into one big cohort—Generation Stressed.

Here's why that matters: According to Coughlin, clients' daily stress is the single biggest hurdle that advisors face when trying to get clients focused on planning for their futures.

He points to three main contributing forces:

  1. Volume. The number of issues that demand our attention seems to rise each day; we are dealing with more choices and more to manage than ever. As the number of options rise, the level of engagement often falls. In our brains, "more" becomes overwhelming and oppressive instead of liberating.
  2. Velocity. Technology has improved our lives in countless ways. But it has also greatly increased our expectations of how fast we, and others, should be able to get things done. All of us feel more pressure than ever to do it, all of it, right now.
  3. Complexity. The never-ending flow of new, often conflicting information and opinions actually creates more uncertainty and doubt. Many approved standards for how we should live our lives—from nutritional guidelines such as the food pyramid to the percentage of our income we need to save to retire comfortably—seem to change from week to week. This lack of clarity causes most people to stress out, shut down, and do nothing rather than risk taking the "wrong" action.

The stress that these three forces creates and amplifies actually changes how we process and scan for information, says Coughlin. Stressed-out clients, for example, will see only what's in front of them. They may ask for more information or data from advisors when the markets are tumbling, but their brains become unable to process it as they go into classic fight-or-flight mode.

In the face of this volume, velocity, and complexity each day, it's hardly surprising that many advisors struggle to get their clients' attention—or that their requests to meet and plan for a retirement that may be decades away are ignored.

But if advisors can engage with clients in ways that reduce their stress, they can get those clients—regardless of what generation they're part of—to listen and start taking action.

Getting through to Generation Stressed

Advisors can break through stress and noise by taking six key action steps that will help them recapture their stressed-out clients' attention—and get them focused on planning for lengthy retirements with new rules and realities.

  1. Make each interaction small and digestible. Anxious clients are more receptive to small bites of information about creating a plan than they are to a request for a 90-minute meeting to tackle the whole thing. Moving clients along inch by inch can stop them from feeling overwhelmed—and encourage them to keep coming back for more advice and solutions. 
  2. Help clients feel smarter. Clients want to feel that the people they seek out for advice are helping them make better decisions. Helping clients feel smart and empowered about their options reduces their stress and makes them more willing to engage than if they are always getting the message that "This retirement stuff is hard." Highlight the benefits that various retirement strategies and solutions offer, and show how clients can exert some control over outcomes (e.g., by investing regularly or steadily increasing contributions to their retirement plans).
  3. Keep it easy. Consumers across the board expect to get things done easily and efficiently. Millennials expect transactions with advisors to be easy, thanks to technology, while older adults simply don't want to deal with more noise. Giving clients more information to read can feel like just more work to do and cause them to shut down. 
  4. Reassure clients about their choices and decisions. Advisors can reassure clients by sharing the decisions of other people like them who have taken similar steps—much like Amazon.com helps customers feel more confident about their purchases by showing how many other people bought the same products.
  5. Make the client experience personalized and engaging. Retirement planning itself may not get clients excited, but the experience around it can be customized to get them in the right mind-set. Some ideas: Swap out financial publications in the waiting room with lifestyle content that speaks to clients' retirement goals; use empowering language when discussing investing and the client experience (e.g., a "discovery session" instead of an initial client meeting). For some clients, gamification tactics may be motivational (e.g., chart clients' progress in a smartphone app by awarding stars or points when they complete tasks such as opening an account or transferring assets).
  6. Be relevant to the present and to the possible future. Frame retirement-planning discussions around specific issues and stressors that clients are dealing with in their daily lives right now. If a middle-aged client is taking care of elderly parents, for example, use that situation to jump-start the client's own long-term-care planning. Likewise, leverage a talk about paying for a child's college tuition into a conversation about the need for future retirees to keep enhancing their knowledge to stay relevant in the workplace.

By focusing on longevity planning that reflects the new face of retirement in the coming decades, advisors can help their clients navigate golden years that promise to be more dynamic than ever. Getting clients to understand the new retirement imperative and feel confident about their ability to achieve success will strengthen their commitment and loyalty—and could help build a great advisory practice along the way.

To increase your firm's productivity and performance, share the quick highlights from Dr. Joseph F. Coughlin's presentation with your team to expand their knowledge and start a discussion about retirement planning in the face of longevity.

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