Brocker.Org: Retirement Planning Tips for Clients in Their 50s


No one knows how long they are going to live. What we all know is that over the last 50 years the average life expectancy has been consistently increasing. According to the World Bank the average life expectancy in the US rose from 70 in 1960 to 79 in 2015. Thanks to medical advancements and the idealization of a healthy lifestyle, people are living longer. This is great news, but it also means that people are going to need their retirement savings to last longer – maybe longer than they expected.

How does a financial advisor help clients plan for life during retirement? There are a lot of questions that need to be asked, from where the retirement income will come from to how long retirement savings will last. If clients have been saving, but not planning for retirement, it’s never too late to get started. Here are three ways financial advisors can help 50-somethings plan for retirement. (For more, see: How to Advise Clients Who Are Behind on Retirement Savings.)

1. Maximize Retirement Contributions

Ideally, clients in their 50’s are at the highest earning potential of their lives. This presents a big opportunity for retirement planning. With a high salary and hopefully a low amount of debt (because the mortgage is paid off or close to being paid off), clients can maximize their retirement contributions.

If a client has unused contribution room in their IRA, this is the time to start increase contributions. If their employers offer a 401(k) plan, clients should increase their contributions to take advantage of any matching contributions. This will help boost retirement savings in the years leading up to retirement. Clients can also inquire if their employer offers non-registered group savings plans such as stock options plans to help boost their savings and max out their contributions.

2. Find a Balance Between Growth and Preservation

Retirement planning for clients in their 50’s poses an interesting challenge. On one hand, this age group wants to squeeze as much growth out of their investments as possible during the last of their contribution years. However, this could mean they are subjecting their accumulated retirement savings to a large amount of risk. This is important to note because in just a few years, the income provided by these investments could account for a large part of their income after they retire. That’s where the assistance from a professional financial advisor comes in. (For more, see: Retirement Planning Strategies for Clients in Their 60s.)

As a client’s planned retirement date approaches, it is important to rebalance their retirement portfolio – or at least review their goals and asset allocation on a yearly or quarterly basis to determine if rebalancing is needed. When 20-somethings invest for retirement, they have many years to recover from potential market downturns. Unfortunately, that is not the case for people in their 50’s who are planning to retire in a few years. Reviewing investments to ensure clients are comfortable with their level of risk and time horizons is crucial for successful retirement planning in your 50’s.

3. Start Thinking About Lifestyle in Retirement

For 50-somethings, retirement can be anywhere from five to fifteen years away. Something that can make it easier for financial advisors to help clients plan for retirement in their 50’s is to start asking clients about the lifestyle they want to have in retirement. The key to successful retirement planning is to be realistic.

Clients should consider factors such as where they want to live, how much they want to travel, their dependents and how they plan to spend their time day to day. From there advisors can create a retirement projection based on current and future savings, future sources of income and monthly obligations such as remaining debt and living expenses.

Thinking ahead about estate plans and future tax brackets also plays an important role when planning for retirement in your 50s. By discussing these topics, financial advisors will help clients set realistic retirement goals and create a suitable retirement plan. (For more, see: Advisors: Have Clients Try on Retirement for Size.)