Retirement Planning
Time to Recalibrate Around Risk and Reward
As Americans become increasingly aware of the need for strategic planning in today’s shifting economic environment, they are seeking new ways to prepare for retirement. A 2010 Financial Realities study sponsored by Northwestern Mutual reports that consumers’ top financial concerns are building a broader portfolio for retirement, preparing for rising healthcare costs and avoiding the potential financial drain of long-term care.
“There has been a shift away from the expectation of double-digit returns on investments,” says Greg Oberland, the company’s executive vice president for insurance and investment products. “Consumers are more sensitive now to the risk side of the equation, and are looking to diversify their portfolios with products that have some built-in safety and more predictable returns.”
Longevity’s Effect on Lifestyle, Legacy
For many years, healthcare costs and maintaining a comfortable lifestyle in retirement have been the main concern, says Rebekah Barsch, director of retirement planning. “We are starting to see a greater understanding of the risks of a long-term-care event. That’s a very real risk. The average yearly cost of a private room in a nursing home is approaching $100,000*.”
“An advisor who understands the client’s specific retirement goals can help pull it all together.”
Greg Oberland, EVP, Insurance and Investment Products, Northwestern Mutual
The fear of running out of money in retirement is beginning to keep even the affluent up at night, Barsch notes. “That’s something we haven’t seen before, because when the market is doing well, running out of money is less of a concern. There is also a common misconception that the strategies used to accumulate wealth are sufficient for getting through retirement.
“When we talk with consumers who are getting ready for retirement, they are looking to get a clearer understanding of their risks in all areas,” says Barsch. “Even the most financially savvy individuals want a comprehensive plan and an advisor who helps them consider both the risks and the opportunities of retirement. Not only do they need their assets to last for their lifetime, but they also hope to leave a legacy for their children, grandchildren or charities.”
Comprehensive Strategies Can Help Optimize Income and Minimize Risks
In all of these discussions, it’s about the plan, not about the individual products, adds Oberland. “There’s no one supercharged product that will do everything for every person. The product mix may include investments, annuities, life insurance, disability insurance and a cash reserve. An advisor who understands the client’s specific retirement goals can help pull it all together.”
“The most frequent question that our advisors get asked by clients is, ’How much money can I spend in retirement and still be okay?’” says Barsch. “The way we approach this challenge is to say, ‘Let’s work on optimizing your income so you can enjoy the kind of retirement you want. But then let’s also take care of the things that might derail that income plan.’”
For more information about the Financial Realities study, please visit northwesternmutual.com.
“Northwestern Mutual” is the marketing name for The Northwestern Mutual Life Insurance Company (NM), Milwaukee, WI (life insurance, disability insurance, and annuities), and its subsidiaries and affiliates. Securities offered through Northwestern Mutual Investment Services, LLC (NMIS), a wholly-owned company of NM and a dually registered broker-dealer and investment advisor, member FINRA and SIPC. Investment advisory programs and trust services offered through Northwestern Mutual Wealth Management Company® (NMWMC), Milwaukee, WI, a wholly owned company of NM and limited purpose federal savings bank.
*Results of Northwestern Mutual’s Cost of Long Term Care study conducted in June 2010 showed that the national average annual cost of a private room in a nursing home based on the NLTC regions in the study is $90,155 per year.
