The Retirement Conversation

In Profile: Doug Dubitsky

Sea Change

by P.E. Kelley

Mr. Kelley is managing editor for Advisor Magazine. Connect with him by e-mail:

We all have some notion of retirement: what we might do, where we want to live and how we’ll spend our golden years. But as the post-war generation completes its final stage, and as Boomers begin to flow into theirs, there is a new and troubling sensibility emerging: the suddenly hazardous prospect of living without working… and of realistically affording to do so.

The safety of erstwhile pension systems has given way to a challenging, self-financed model. But as healthcare costs swell like flood waters and as the miracle of longevity imposes an ironic financial burden upon retirees, planning for an
effective income has become life-critical, and in some cases presents frightening scenarios of shortfall. 

During National Retirement Planning Week (April 11-15) we caught up with Doug Dubitsky, vice-president of Product Development for Retirement Solutions at Guardian Life. 

He spoke briefly about the dilemma of adequate planning today. The conversation, he told us, is surely changing. Our clients, wherever they may be along their own planning-continuum, have to ask some new and very hard questions about navigating the costs of retirement, the finance of longevity if you will, that may conflict with, if not directly contradict the notions of their retirement dreams.

Amid an historic sea-change in our existing financial structures and planning-systems, a revolution that may be evolving too fast for some to keep up, the industry faces a staggering challenge: how do we get our clients safely ashore?

Advisor Mag: How would you describe the current state of retirement planning?
DD: A recent poll discovered that more than 60 percent of Americans do not plan on working during their retirement years. However, for many Americans this just isn’t a possibility.

The cost of living continues to rise, and many Americans delay saving for retirement until it’s too late, which forces them to take on a part-time job as a source of supplemental income. Yes, they can get Social Security retirement benefits and work at the same time. However, if they are younger than the full retirement age for Social Security purposes, and make more than the yearly earnings limit, their benefit will be reduced.

Regardless of intentions, the most likely way to avoid working during the retirement years and still live the comfortable, less stressful life most look forward to, is to have a personal retirement plan in place that will cover major retirement risks, such as health care costs, longevity risk, and inflation risk.

Ultimately, think about what sources of guaranteed income are set up to cover clients’ core expenses in retirement

Advisor Mag: What are some key questions to consider when planning for retirement?
DD: First take some time to have your clients thoroughly think about what they would like for their retirement years. How do they want to live, and what do they value most?

This will impact the amount of retirement funds they’ll need to keep available. Many times, retirees fail to set aside funds in the beginning and find it near impossible to catch up in later years.

Advisor Mag: What steps should be taken to get retirees started on a retirement strategy?
DD: Sorting out financial priorities is one of the first steps toward creating a successful retirement plan.

Help your clients set goals and time horizons now. You can be instrumental to helping retirees develop realistic action plans that will help them make progress. To get started, take a sheet of paper and divide it into three columns – short-term goals, medium-term goals and long-term goals. List their goals, placing each one in the appropriate time horizon.

When that is finished, rank the goals in each list according to their priority so that you can estimate the potential cost of each goal and determine how much money they already have that can be allocated to it. At this point, together you can determine how much more is needed to save to reach for certain goals, and what can be done to keep on track.

Advisor Mag: For financial professionals assisting clients with retirement planning, what advice would you give for their approach?
DD: The right financial professional can provide expert insight to help clients develop a comprehensive plan addressing their needs and goals, particularly to help build a retirement income strategy.

To be seen as an ally for retirement planning, financial professionals need to make sure they create clear steps for their clients showcasing how each goal can be achieved. Ultimately, think about what sources of guaranteed income are set up to cover clients’ core expenses in retirement (such as health insurance, living expenses, etc.)

Advisor Mag: Are there any red flags that financial advisors should discuss with their clients to avoid any threats to their future financial security in retirement?
DD: Be sure to separate needs from wants.

Advise clients to review their spending habits, especially for discretionary items, and ask them, item by item, ‘Is this really necessary?’ It is important to keep long-term goals in mind so it seems less of a sacrifice.

Additionally, remind clients that they should pay themselves first. When saving for retirement, successful planning includes putting aside money every month to reach long-term financial goals. This way, there will be less cash to spend on discretionary items and clients will make faster progress toward fulfilling their financial plan. ◊