New Retirement, New Planning

Dan Veto, with AgeWave, a research company in Emeryville, California, told attendees of the National Tax Sheltered Accounts Association’s (NTSAA) 403(b) Summit that Baby Boomers have transformed the retirement advice business. Between 2000 and 2020, the 55 and older age group will grow 73%, and Boomers have an attitude like no other group this age that has come before them—they are not going to quietly disappear, he said.  

Boomer women also bring a different perspective; they were the first generation of women to be expected to go to college and enter the workforce. They want an equal say, Veto noted.  

However, people receive virtually no education about long-term/retirement saving and investing.  

The recession and media reports woke people up to their retirement savings needs. Ten years ago, respondents to an AgeWave survey said they were going to retire at age 64, now they say they will retire on average at age 69, according to Veto.  

Veto added that as people age, material things become less important; relationships and experiences mean more. An AgeWave survey found only 30% of Boomers said they never want to work for pay again, but only 5% want full-time work. The new retirement is a cycle between work and leisure. Veto shared the example of a woman he knows who works very hard during tax season, from January 1 to April 15 each year, then takes the rest of the year to do what she wants to do.  

Some Boomers decide to go back to school when they “retire.” And, Veto noted, leisure is still a big part of their definition of retirement. In addition, Boomers want to leave a legacy, with their families and their communities. Asked ‘What is retirement,’ 54% of respondents to an AgeWave survey said “a whole new chapter in life.”  

So, how can they make this happen financially?  More and more, individuals have to rely on themselves for financial security. Some will spend more years in retirement than working. People don’t understand this, Veto contended. He said the industry needs to stress to pre-retirees that 80% certainty of not outliving their assets is not enough; they need 100% certainty.  

Families can also derail a person’s retirement plans. Advisers should ask clients if they expect to give financial assistance to a family member. But, even if they do not expect to, they should plan for curveballs, such as an unemployed child or sick parents.  

People want peace of mind in retirement. Veto said only 13% of individuals surveyed indicated their objective is to accumulate wealth for retirement; 82% said they wanted financial peace of mind. Income protection (guarantees) and lifetime income were also top of mind. “If you don’t know about these [products], you are not keeping up with the new [retirement] market,” he told attendees.  

Asked what they want in an adviser, 72% of survey respondents said they want someone who speaks in terms they can understand. Seventy-five percent want an adviser who listens to them to know what they want and need.