Income Planning

The New Variables Of Pre-Retirement

Six ‘what-ifs’ to help your clients make smooth transitions

by Anthony Delauney, CFP® BFA®, ChFC®, CRPC®, RICP®

Mr. Delauney is a financial advisor, a franchise business owner and author of the book The No-Regrets Retirement Roadmap. Visit

What’s the most common concern your clients have when planning their transition into retirement? The question sounds simple, but one surprise I’ve discovered after working with families over the past two decades is that the answer often changes as people approach their retirements.

Initially, they worry about reaching a number. “I need this much to achieve happiness in my golden years.” How that number is determined is open for interpretation. Some individuals read articles stating your assets have to be at a certain amount by a set age. Others might use online financial calculators where they plug in their incomes and investments, and the calculator spits out an estimated asset target goal.

Still others may engage in some level of financial planning where they conduct a deeper dive into their current financial situation to determine their net worth and cash flow. Using this information, they calculate an estimated required annual income to maintain their standard of living and the number of years that they need the money to last. Factor in inflation, give the investments an assumed rate-of-return, and presto, they’ve determined your magic number needed to achieve a happy fulfilled retirement.

So… What If?

It sounds easy, but as many advisors know and their clients are discovering, the initial plan does not always work out as expected, and there are multiple added variables that can pop up in the final years leading up to retirement. Let’s call these variables the “What ifs”. Listed below are six What Ifs that I encourage advisors to address with their clients before making their retirement transition:

What if any unforeseen expenses pop up?
Before retirement, have your client conduct a survey of their home to determine what short-term expenses they will need to address with their retirement assets. Roof-repair? Car replacement? Deck upgrade? Kitchen remodel? It’s important they know that money is set aside to cover these expenses before they retire so they don’t end up needing to dip into thieir dedicated retirement assets as soon as they make the transition.

What if my identity is stolen?

Help them take the steps to protect your identity. Have them update their account user names and passwords. Consider freezing credit reports or setting up some type of credit monitoring. Properly dispose of unneeded old documents that have confidential information on them. Consider consolidating accounts if multiple accounts serve the same function. For example, if they have three or four old work retirement plans lingering on their net worth statement, see if it makes sense to consolidate them into one plan or even an IRA.

What if I get sick or pass away?

Address their estate planning. Make sure that they have an updated basic will, an advance care directive and a power of attorney document established. Confirm that all of their account and insurance policy beneficiary designations are accurate, and confirm that the people listed in their estate documents, especially the executor, know where the documents are located. In addition, determine what income sources will stop if they die. Are others depending on your social security benefit or pension income? If yes, have they addressed how they would be impacted if something happened to them? Do they know?

It sounds easy, but as many advisors know and their clients are discovering, the initial plan does not always work out as expected, and there are multiple added variables that can pop up in the final years leading up to retirement...

What if tax brackets change in retirement?
Confirm that they have a game plan on taking funds out of their retirement accounts to help minimize taxes owed during their retirement years. Confirm at what age they plan to start taking social security. If there is a gap between when they retire and activate their social security benefit, determine what accounts they plan to use to generate their retirement income. Do they have accounts that are taxable, tax-deferred and tax-free? Do they know how their social security income will be taxed?

What if I/we forget to have “The Vision Talk”?

If this What If question takes them by surprise, then mission accomplished. Oftentimes, people enter into retirement with a blurred vision of what their retirement years will be like. They imagine the exotic trips, free hours to sleep and binge watch television, or eating whatever they want at random hours. The reality is that just like during their working years, structure is essential to enjoy a healthy fulfilled retirement. Take the time to determine what activities they currently do that bring them joy and fulfillment. If there are new things that they want to try, why wait until retirement? See if those activities are what they thought they would be. Planning to move to a new location? Have them set aside some time pre-retirement to visit the location to confirm that it is everything they hoped it would be. In my experience, the happiest retirees enjoy a structured week that allows for flexibility.

What if I’m not ready to retire?
One of the hardest lessons I learned as a young professional is how to grasp the fear of success. Fear of failure seemed simple. You knew what you didn’t want to have happen, but with fear of success, there is a need to recognize that we can talk ourselves out of almost anything that will make us happy. We convince ourselves that we don’t deserve success, especially if those around us don’t have the same drive or passion to achieve it.

For example, I used to wonder why someone who grew up with little money and wins the lottery can often go bankrupt in just a few years. The reason is because we are uncomfortable with the unfamiliar. We unconsciously, and sometimes even consciously, take steps to make ourselves fail so that we don’t have to feel the discomfort of what may lay ahead. Help your client take ownership of this understanding and determine if they have lingering questions that they have been afraid to answer? If they are not sure they are on track for your retirement dreams, help them figure out what they can you do now to answer those questions and take action?

These tips will help your clients build the foundation of their retirement planning strategy by eliminating the clutter! Once they’ve built their foundation, helping them set numbers to goals and creating a game plan to generate a lifelong retirement income becomes much easier.