Filling In Your Clients’ Financial Literacy Gaps

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No matter how informed your clients want to be about finance, the truth is that they're likely lagging in one area or another. A 2020 survey by the American College Center for Retirement Income found that four out of five older Americans don't understand the basic approach to securing a retirement income.

Your clients can't expect to have a secure retirement if they don't understand the basics of how to create one. To help your clients learn to save intelligently, maximize their nest eggs and secure a worry-free life post-retirement, consider sharing these two tips.

1. Before retiring, plan for post-retirement healthcare costs

People work hard their entire lives looking forward to those golden years of retirement, but life without a steady income requires careful financial consideration, particularly in terms of long-term medical care.

Research from Fidelity found that a 65-year-old retired couple in 2021 would need a total of $300,000 saved just for their post-retirement healthcare costs. Those with chronic illnesses or high-cost prescription drugs will need far more to have a chance at successfully funding their health care throughout retirement.

An often overlooked area of healthcare costs after retirement are long-term care expenses. These costs are not covered by Medicare and can run an average of $51,600 annually for an assisted living facility and $105,850 annually for a private nursing home. Before your clients assume it's not something they need to worry about, let them know that approximately 70 percent of individuals turning 65 will need some kind of long-term care assistance over their lives.

2. Active planning is critical

Your clients may think that if they contribute to an individual or employer-sponsored retirement account, they are actively planning for retirement. However, a 401(k), a Roth IRA, or even a pension may not be enough to offer plan participants the retirement they've been counting on.

A plan for retirement requires more than just savings; it requires a strategy for tax-deferred growth, ongoing, guaranteed income, accessible cash for big ticket purchases, and a well-managed asset portfolio. After all, while paychecks may stop after retirement, smart investments continue to pay out. For example, many retirees and retirement-age individuals don't have the full picture on annuities, which can provide tax-deferred growth, death benefits and periodic payments. They also may not know how a life insurance policy can help them fund large purchases without selling investment holdings and can help fund a succession plan for their business. 

When it comes to funding a retirement plan, Global Financial Distributors can assist by offering Leveraged Planning solutions to business owners and high net worth individuals. Contact a Financial Services Manager today to see if life insurance premium financing is right for your client.