The first wave of Baby Boomers turns 66 this year, the new normal age for full retirement benefits from Social Security. This mega-generation will continue to march into retirement at the rate of 10,000 people per day, every day, for the next 18 years. Given the new economic realities in the wake of the Great Recession and the likelihood that markets may continue to be volatile for the foreseeable future, are financial advisers equipped to help their clients shift from accumulating wealth to distributing it in a way that will last the rest of their lives — no matter how long that may be?
Over the last few days, I have met with several thought leaders in the retirement income arena. Many of them have suggested that it's time to create a new certification for advisers — one that focuses on the decumulation phase of retirement planning. The emphasis would be on cash flow in retirement, maximizing Social Security benefits through the proper claiming strategies, and evaluating products to create income such as annuities, dividend-paying stocks, master limited partnerships and REITS.
What do you think? Is there a need for additional training to better serve your existing clients
Recently, my colleague Darla Mercardo wrote that some advisers are rethinking the classic 4% withdrawal rule in the light of continued market volatility, urging their clients to scale back withdrawals to 3.5% or even 3% to better preserve assets in uncertain times.
Erin Botsford, CEO of The Botsford Group, in Frisco, Texas, is shaking up the adviser community with her new book, The Big Retirement Risk: Running Out of Money Before You Run Out of Time. She rejects systematic withdrawals altogether — regardless of the percentage rate — as a viable way to handle her clients' retirement distribution plans “Traditional models of asset allocation don't take into consideration the one thing that that the vast majority of retirees need — cash flow,” she writes. Instead, Botsford urges her clients to divide their expenses into needs, wants, likes and wishes and to match those expenses with appropriate investment vehicles that produce income, either now or in the future
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Check out my
interview with Erin Botsford on INTV and plan to attend the annual InvestmentNews Retirement Income Summit in Chicago April 30 and May 1 to learn more about these and other retirement income strategies. Don't forget to weigh in with your comments here on whether the adviser community needs a new designation of Retirement Income Specialist or does the current alphabet soup of credentials suffice?
