Remember how your parents lived or are living in retirement? How about your grandparents? Their calendars were wide open. Actually, they didn’t really need calendars since it seemed like the only things, they had to keep track of were grocery shopping, doctors’ appointments or a trip to the bank to deposit their Social Security checks (yes, they had to deposit their own checks back then!).
That generation didn’t need much because, as a whole, they didn’t do as much. A generation that grew up during the Great Depression carried those hard lessons with them forever… and who could blame them? I first began my career in financial services in 1996, working with clients from the tail end of the Depression Generation. If someone asked me to describe my typical client back then, it wouldn’t be very difficult. My clients were very conservative – in fact, they still are today – and usually lived off whatever fixed income they received.
The Depression Generation learned to save money. Even in retirement, they were still saving for a rainy day. If by chance they happened to need extra money for an unexpected expense, they didn’t charge it to a credit card. These people paid cash, and if they didn’t have the cash on hand and absolutely had to meet the expense, they “took interest” from a bank CD or cashed in a savings bond – something that it seemed like every retiree owned back then. The Depression Generation retirees generally had predictable needs, goals and concerns because the financial trauma they experienced earlier in life trained them to live a certain way.
Working with this generation, I didn’t get many questions about 401(k) rollovers, or required minimum distributions (RMD) from IRAs. Because most of the companies they worked for didn’t even offer 401(k)s until their last few working years, while the IRA made Up a very small fraction of their savings. Most of my clients had simple financial needs and an even simpler retirement goal:
Don’t lose it! When I hosted my first retirement seminar, I already knew what the people wanted to learn about because they all had the same goals, the same concerns, and the same values. So what did they want?
They wanted to make sure that nursing homes didn’t eat up their savings. These four things were the foundation of the “retirement issues” most people wanted to be addressed. They weren’t concerned about tax laws. Most of these retirees had pension plans, savings accounts earning 5% or more, and CDs earning even more than that.
The Depression Generation wanted their money to grow so they could leave more of it to their kids. They would quite literally “go without” so they could leave their kids better off financially when they passed away. Ironically, most of their kids, who are today’s Baby Boomers, didn’t want their parents to go without just so they could leave them more money. They wanted their parents to enjoy the fruits of all of their labors themselves – to take that vacation, to buy that new car, to enjoy life while they could. But it’s hard to rewire someone’s belief system. Those 1996 retirees were raised in a time of scarcity – so scarcity remained their primary concern.
Don’t get me wrong – times may have changed, but there are some retirees out there who are still living like it’s 1996. Last year, for example, I had some clients come in for an annual review. For years, I had been encouraging them to begin drawing more income from their annuities. I knew they had a modest bucket list that included some traveling and family vacations, and I had been looking forward to helping them scratch off some of those items. But they never seemed to feel comfortable spending money on themselves. They were more concerned with making sure their money would last forever. I was surprised when we sat down for this one meeting and they said, “We’ve decided we are going to start doing more, we want to start spending our money. As soon as I finish my chemo, we are going to do a river cruise in Europe.” Those words haunted me – and made me think about my Great Aunt Irene. She too grew up during the Depression era. She spent most of her life – from age 11 – hard at work, toiling in various shoe shops and mills, working the night shift, the graveyard shift, or the early morning shift. She never made a lot of money, and she worked hard for every dollar she made. When she wasn’t working, my aunt loved to entertain family and friends, especially during the holidays. Even though she lived in a small apartment that our family barely fit into, I always looked forward to visiting Great Aunt Irene. Her gatherings were the site of many of my favorite childhood memories. She was all about FAMILY – a philosophy that affected me so strongly, it’s part of what I strive for in my personal and business life to this day.
I remember one year on either New Year’s Day or Thanksgiving when Aunt Irene was about 56 years old. She was so excited to have us over because she had purchased a new living room set. She had been telling us about it for months and was so proud of her new furniture. She told us where she bought it and how she had selected this brand and particular set. We knew she must have been saving up for a long time, and knowing her, she probably made payments on it over time, because there was no way she could have paid for it all at once.
Looking back, it was probably one of the only “brand new” things she had ever bought on her own. When we arrived, the new furniture was on full display – a high-quality white sofa with a matching love seat. It wasn’t fancy, but my aunt was positively beaming as she showed it off. However, she hadn’t removed the protective plastic covering from the furniture! I just assumed it was delivered that way and she hadn’t had the time to remove it. So we enjoyed our dinner and laughter and didn’t give it another thought. Until… When we went back to Aunt Irene’s next year and the furniture was still wrapped in plastic! I couldn’t believe it. I asked, “Aunt Irene, why is there still plastic on your furniture?” I’ll never forget her answer. “It’s there to make it last longer.” She said it so matter-of-factly, almost like I was silly for bringing it up.
She had spent so many years saving and sacrificing to buy something nice for herself that she didn’t want to ruin it or wear it out. So, we all sat on the floor to avoid sitting on the new furniture covered in plastic, which kind of defeated the purpose of the new furniture in the first place…
A few years later, when she was only 59 years old, Aunt Irene passed away. She was diagnosed with a brain tumor on a Monday and passed away the next Saturday. One day she had a headache and the next week she was gone. I have probably told this story to clients and friends a hundred times over the years. Why? Because it had a big impact on me and I think it’s a tale many people can connect with. When someone has been working full time since the age of 11, it’s easy to understand how they might relate to money and appreciate the value of a dollar.
But my aunt never got to fully enjoy what those dollars bought, she was always afraid. When she died, the plastic was still on the furniture. She never got to sit on her new couch and feel the fabric and sink into those cushions. I thought that was such a shame. I fully understand wanting to protect things that took years and years of hard work to obtain. But there is a big difference between protecting your assets and being afraid to enjoy them. If I could go back in time, I would have suggested that she buy a lifetime warranty on the furniture – a guarantee, for a fee, that if it wore out too early, or got damaged, it would be replaced or repaired. That way, she could have enjoyed it freely without fear of wearing it out too soon.
This is one of the reasons I recommend annuities for part of your retirement strategy. Annuities are a guarantee. * You have worked hard to get to retirement. Ensuring your retirement income with annuities in a customized strategy can provide guarantees* for life** - a lifetime “warranty” on your income. They are the only financial products that will guarantee income distributions for your entire life regardless of how long you live -- or market conditions. After all, taking the plastic off of your retirement after chemo probably wasn’t your original plan. I have conducted well over 10,000 interviews in my career, usually with retirees or people nearing retirement. I have NEVER had anyone tell me that they carefully saved for retirement for over 30 years so that when they finally had enough money to quit working, they could save some more. Primarily because today’s generation – at least most of it – is a little different from my Aunt Irene’s generation. Not only are today’s retirees living longer – but often without the perks previous generations retired with – they’re also living differently. They want different things out of retirement than previous generations did.
The vast majority of them definitely do not want to keep the plastic on their retirement nest eggs. I call these new retirees “The Golf Cart Generation.” These retirees watched their aunts, and their parents and grandparents, scrimp and save throughout their golden years. They’ve decided that they want more than that. They’re looking for a lifestyle that’s different than how their parents spent their retirement – because these retirees have a different relationship with money. They want to use it as a tool to a better lifestyle--not hoard it all for a rainy day. While their financial situations are more diverse and unique, most have one thing in common. They want to enjoy their retirement NOW. This generation wants to play – they want to compete – they want to be healthy – and they want to change the rules of retirement. They intend to go down swinging, and because they do, they are using different financial vehicles to help them meet their retirement goals. One of my favorite authors, Malcolm Gladwell, once wrote about a town in Pennsylvania where the community was extremely tightknit. The people there were dedicated to being happy, sharing with friends and neighbors, anchoring themselves in the community, and caring for those in need whenever they could.
It turned out that the members of this community lived longer and healthier lives than the people in almost any other place on earth--- I believe the Golf Cart Generation has a lot in common with the citizens of that Pennsylvania town. Because of that, they’re not only rewriting the rules of retirement, I believe they will also rewrite the life-expectancy tables. The Golf Cart Generation wants to retire on their own terms. They don’t want to be concerned about the money the way their parents were. They want to be more financially confident in knowing that if they take care of themselves and stay true to their core values, they can afford to live well into their 90s and 100s. At the same time, they want to be sure they will not outlive their retirement assets. I have called The Villages, Florida home since January of 2000 – a town that has been dubbed the “nation’s fastest-growing metro area” by the Orlando Sentinel and ranked by Forbes in 2012 as “the No. 1 fastest-growing small town.” A lot of those new residents are also new retirees. When I meet a couple for the first time, I always ask them “The Question”: “So, how’d you end up in The Villages?” And then I get “The Answer.” “Well,” they might say, “we saw an ad on TV, and they were offering these great packages on a one-week vacation….it was cheap! For something like $600 they put us up in an amazing place and they gave us some money that we could spend inside the ‘bubble.’ We went dancing and played golf and they took us on a tour. They showed us this game you play with pickles and balls…and before we left, we bought a $250,000 villa.” Wait…what? From pickles and balls to an investment of $250k?
That’s the most expensive “cheap” vacation most of us will ever experience! But for the people I work with who’ve made The Villages their home, it’s worth every penny. The reason? I believe it’s the lifestyle. I see them living lives that are healthier, more active, and have more recreational options and more spiritual purpose than the lives of many 20, 30 or 40-somethings. This is the opposite of what your parents experienced when they retired. Were their lives about joining social clubs and team sports and planning fun activities? Were their day planners packed with activities like mahjong, woodworking, softball, polo, Parrot heads, the Ohio Club, and the Italian American or Irish organization? Maybe they didn’t even have a day planner. For many of our parents, life was focused on saving for a “rainy day.”
Which sometimes made it hard to enjoy the days that were sunny. But today, in places like The Villages, there are thousands of clubs for retirees to choose from. And then there’s golf, which seems to be at the heart of everything. What would your parents and grandparents have thought about going to the doctor, grocery shopping and making a bank deposit if they could have tooled around in their own golf cart? It kind of changes your whole perspective on things, doesn’t it? Here’s the thing. If you don’t want to retire like your parents, then using your retirement assets in the same way – with the same old strategies that worked in the past – doesn’t make sense. Just putting your money in the bank and forgetting about it won’t get you very far with interest rates at near-record lows. What you need is a retirement income strategy that actually fits your financial goals. For some, this may mean using annuities to guarantee* a portion of your income, so that it will never be outlived. ** This leaves you with a couple of choices. You can focus on a distribution strategy that will provide the income you need to enjoy for yourself and with your family while you’re living, allowing you to make memories together and enjoy a rich retirement lifestyle. Or you can stick with an accumulation strategy. Either strategy is fine if it supports the lifestyle you want to focus on. When you were imagining what retirement would be, and you were saving and accumulating, what did retirement look like to you? Those are questions only you can answer.
I am now going to introduce you to “four little words” that are powerful and will help prevent you from uttering some unpleasant “four-letter words” down the road – especially when it comes to your retirement income planning. What are they? “Get it written up!” Since I began my career back in 1996, I’ve probably conducted more than 10,000 interviews with retirees about their retirement strategies, dreams, and concerns. A lot of these people already had a “financial person” advising them about their money. But none of them had any written plans
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That’s right. None. Zero. I literally cannot recall ever seeing a single financial or retirement income plan that was presented to me in writing. Not once in over 10,000 meetings has a prospective client come into my office, shown me a written retirement strategy, and asked me what I thought about it. To be clear, I’m not talking about an insurance illustration or an industry-regulated prospectus People bring those in every day. But those aren’t strategies for how to use your money. What I mean by a written plan is a written strategy specifically designed to help you, the client, understand where your assets are and what you may be able to expect in return. As you might imagine, a tool like that could be very helpful.
It’s hard enough choosing a team of financial professionals to help you accomplish your retirement goals. Insurance and annuities can be difficult products to understand. Policies and contracts are written in legal terms – or “legalese,” which can be confusing and challenging to understand. That’s why I make sure each and every one of my clients receive a formal, written document, in plain English, explaining how their retirement strategy is designed to work. Talk is cheap – and let’s face it, one of the hardest things to do is trust the words that are spoken in a conference room, especially when an agent or professional is trying to convince you that they have all the answers for your personal financial situation.
Sometimes I worry about what is being said to solicit business. However, I worry a lot more about what isn’t being said, disclosed or discussed in those meetings. Often, people don’t know the right questions to ask. How could they? But since you don’t always know what to ask, how can you be sure you’re getting all the information you need to make an appropriate decision about your financial future? My purpose here is not to beat up on the “other” financial representatives out there. It’s not easy to understand and explain everything the client needs to know in just a few meetings. And even if they have a good system in place to educate their clients, a one, two, or even three-person financial team has their hands full when it comes to covering everything that goes into designing a comprehensive, tax-efficient strategy. It’s hard to be knowledgeable about a variety of topics and still find the time to listen to your client's goals, concerns and desires
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That’s why, at The Retirement Group, we take a unique approach to helping people in retirement. We recognize the fact that everyone has different goals, concerns and objectives they want to accomplish with their retirement strategy. We take the time to listen to your needs, and then we work to find the right products to help you design a comprehensive, efficient retirement strategy. We have a number of highly educated professionals on our “planning team”.
In our approach with clients, we typically take them on a two to three month educational journey to accomplish three important things:
Taken together, we think these three distinctions make The Retirement Group unique. We are willing to go the extra mile to ensure that your retirement lives up to all of your expectations If you already have a written retirement strategy – let me be the first to say, congratulations!! And if you don’t, why not? What’s keeping you from getting one? There’s a lot at stake – your retirement future!
The Retirement Group is a nation-wide group of financial advisors who work together as a team.
We focus entirely on retirement planning and the design of retirement portfolios for transitioning corporate employees. Each representative of the group has been hand selected by The Retirement Group in select cities of the United States. Each advisor was selected based on their pension expertise, experience in financial planning, and portfolio construction knowledge.
TRG takes a teamwork approach in providing the best possible solutions for our clients’ concerns. The Team has a conservative investment philosophy and diversifies client portfolios with laddered bonds, CDs, mutual funds, ETFs, Annuities, Stocks and other investments to help achieve their goals. The team addresses Retirement, Pension, Tax, Asset Allocation, Estate, and Elder Care issues. This document utilizes various research tools and techniques. A variety of assumptions and judgmental elements are inevitably inherent in any attempt to estimate future results and, consequently, such results should be viewed as tentative estimations. Changes in the law, investment climate, interest rates, and personal circumstances will have profound effects on both the accuracy of our estimations and the suitability of our recommendations. The need for ongoing sensitivity to change and for constant re-examination and alteration of the plan is thus apparent.
Therefore, we encourage you to have your plan updated a few months before your potential retirement date as well as an annual review. It should be emphasized that neither The Retirement Group, LLC nor any of its employees can engage in the practice of law or accounting and that nothing in this document should be taken as an effort to do so. We look forward to working with tax and/or legal professionals you may select to discuss the relevant ramifications of our recommendations.
Throughout your retirement years we will continue to update you on issues affecting your retirement through our complimentary and proprietary newsletters, workshops and regular updates. You may always reach us at (800) 900-5867.
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