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Tips for Advising Retirees: A Q&A with Bull Moose Retirement

Americans are confused about retirement. If you thought challenges were limited to young investors not knowing where to start, guess again, because retirees in the thick of it are struggling too. Three out of four respondents in a New York Life study with at least $100,000 in assets had no idea how much money they could take out of savings. A separate study in the Journal of Financial Planning found that the wealthiest fifth of U.S. retirees – a group you’d think would have no problems navigating retirement – were spending 53% less than they could have.

Even retirees who have more than enough aren’t confident on what they can spend! And if the population most prepared for retirement isn’t able to figure it out, what is retirement looking like for everybody else?

It turns out that retirees and their children have a lot in common: pessimism about the economy and fear of the unknown. Not spending money in retirement, and hoarding savings due to market mistrust leads to overall bad market health (and less returns for everybody else). At Nitrogen, we want to empower advisors so that you can empower fearless investing. With so many issues to juggle, we decided to host a Q&A with a retirement specialist and knew just who to call!

bull moose

Ryan Clair is part of the father-son dynamic duo behind Bull Moose Retirement Planning Co., a firm specializing in financial strategies for those in, or near, retirement. As experts in this arena, Bull Moose advises retirees with a laser focus on confronting retirement concerns head-on. We talked to Ryan about risk, how to help clients better understand themselves, and what advisors can do now to help the retirees of tomorrow.

If retirement isn’t just a “set it and forget it” strategy, what is your recommended approach to asset accumulation and what should investors be doing for themselves?

The one thing investors forget when planning for retirement is to periodically adjust their approach based on their age and what phase of life they are in. We call it [our] Retirement Focused Approach. As folks grow older and closer to retirement time, their priorities typically should begin shifting from all-out growth to finding ways to better protect what they’ve accumulated thus far – or at least finding out what they would be comfortable risking in the event of a major stock market downturn.

A stock market downturn is a worst-case scenario, but we’ve noticed that the definition of what would constitute a “devastating loss” varies from person to person. How can advisors help retirees to better understand what their risk tolerance is?

The Risk Number? is a very effective tool in helping our clients better understand themselves. Our retirement age clients understand that they have less time to make up for a major loss in their account values, so they see a real value in being able to compare their Risk Number with the Risk Number of their current portfolio. When comparing the two numbers for the first time, many are shocked at how big of a discrepancy there is between the two.

What are the differences between advising the retirees of today versus the retirees of tomorrow?

Our advice to young investors is to begin regularly contributing to a retirement account as soon as possible – even if that means starting a forced savings plan that comes out of your bank account every month. In the past, you could rely on having a pension and working for one company for a long time. Today, things are different, and their retirement may require much more self-reliance and discipline. If your employer matches contributions to a 401(k), take advantage of it.

You’re right, private-sector pensions aren’t as common as they were a generation ago. At one point, 88% of workers could rely on them, and that number is only 33% today. If a client doesn’t have a pension, or an employer 401k, and is starting their retirement plan later in life, what’s the first thing they should do?

It’s never too late to start, but they need to take action. Meet with a retirement planning-focused advisor right away. A meeting like this can be productive in assessing their situation and what immediate steps they should take. Their risk level may need to be adjusted, they may need to drastically increase how much they are saving, and they should be aware that they may be able to take advantage of the “catch-up” rules that allow for greater contributions to retirement accounts at a later age.

Fear of the unknown doesn’t magically disappear when you cross a different stage of life – it effects investors of all ages. Advisors skilled in the unique challenges of retirement are going to be an investor’s best asset in the new best interest economy.

Special thanks to Ryan Clair at Bull Moose Retirement Planning Co. for his expertise. His firm serves clients in or near retirement in the Toledo, Ohio area. Bull Moose was recently featured in our Best Advisor Websites blog post. Feel free to say hi!

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