HOW TO HELP PEOPLE WHO START RETIREMENT PLANNING LATE
Financial advisors, how can you help people who start saving late in retirement? Incidentally, there are many ways to help those who start retirement planning late.
Take on more risk. When it comes to retirement planning, the rule of thumb is to reduce the risk level of an investment portfolio as an individual gets closer to his golden years. But those who begin saving late may not enjoy the luxury. Advisors, make them realize they are running out of time, so they need to exert extra effort and double their savings to ensure a stable retirement. After all, higher risk is tantamount to a higher reward.
Catch up contributions. The Internal Revenue Service offers various retirement plans, including 401(k), 403(b), or a traditional or Roth IRA. If your client is behind on retirement planning, this is a good opportunity to give catch-up contributions, especially if he has already maxed out the standard contribution limit for the year.
Help them determine what they need. Crunch the numbers with your client, financial advisors. This may help them discover the things they still need to work on. For instance, based on your computation, the client might have to bolster his investments or need to work longer than initially planned. The process helps a person know what their progress is in retirement planning, as well as what their golden years will look like.
Open a health savings account. An individual’s overall health degenerates as he gets older. When mapping out a retirement plan, a huge chunk of retirement expenses should go to health-related costs. Your clients can build up a considerable Health Savings Account balance. Medicare is a great help, but it does not cover all health expenses. Setting aside money for an HSA will cut the amount an individual has to save in or spend from their retirement fund.
Financial advisors, if a client begins retirement planning late, here’s what he needs to do: take on more risk, double the contributions, help them figure out their needs, and open a health savings account. That way, they can catch up with their retirement planning even if already late.
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