If you think saving up enough money for retirement is difficult, think again. The hard part comes when it's time to take withdrawals from your accounts in such a way that your money lasts as long as you do.
So, you might conclude, we should get help from the experts, right? But what if the experts say they need help? In fact, about 9 out of 10 financial advisers (93.9 percent) say they need more education on retirement income planning, according to an online survey of 511 advisers released this week by The American College and trade publication, "InvestmentNews."
If financial advisers don't feel qualified to do this job, who does?
Whether or not they're well- or ill-equipped, 95 percent of advisers provide retirement planning services to their clients. Some are learning on the job (31.1 percent); others get an education independently (27.6 percent); and still others take formal courses (24.1 percent). Company-sponsored training educates 8.4 percent of advisers. And finally, 8.8 percent learn by "other" means. Do they read books for dummies on retirement income planning or go online for information?
My husband and I recently went to get advice at a big-name financial services firm, and our adviser seemed to be winging it. He actually told us in no uncertain terms that there'd be appreciably more money left for our heirs if we moved some money into a growth fund. He gave us an actual dollar amount of the legacy we could leave, which was quite a bit more than what we have right now.
This is brazen advice. The truth is, we'll be lucky to leave anything behind, growth fund or not. We're just hoping we have enough, and trying to plan, so that we don't have to ask our kids for money in our old age.
Here are the biggest challenges advisers face, according to the study:
- Defining a clear systematic approach to designing a retirement income plan (34.8 percent).
- Choosing strategies and products that generate lifetime income (28 percent).
- Medical insurance planning (9.2 percent).
- Long-term care planning (9.2 percent).
- Tax planning (6.8 percent).
- Social Security claiming decisions (3.7 percent).
- Other (8.2 percent).
Financial advisers say market volatility, longevity and health care are the biggest risks to manage in their clients' retirement plans, followed by inflation and long-term care. Of course, these are the same risks we face, not to mention financial-adviser risk.
The study's release coincides with the announcement that advisers can sign up at The American College for coursework toward a new designation --` RICP, which stands for Retirement Income Certified Professional. It's another acronym to add to the alphabet soup of financial credentials already out there -- CFP, CFA, ChFC, CFS, CIMA, CLU, CIC, CPA, CPA-PFS and RIA among them.
Don't look to your employer for help
An article in the current issue of Plansponsor Magazine cites a study by Deloitte Consulting LLP of 430 employers of various sizes. None of them have added a retirement-income product to their plans. A whopping 74 percent are not even contemplating such a move. Why not? They don't want to take on the risk of getting sued by workers who may be unhappy with the cost or performance of such a product. They're also concerned about unresolved portability issues -- what if employees leave the company before they retire? What happens to the retirement-income product? Last but not least, plan participants aren't all that interested. They tend not to sign up when these products are offered. It's tough to relinquish a wad of money, even if you get a lifetime guarantee of income.
Retirees out there: Are you getting help from an adviser, and are you happy with that help? Or are you managing your money yourself? Share your experience.
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