Are You "Flying Blind" on Retirement Income Planning?
By Hal M. Bundrick
NEW YORK (MainStreet) ¿ The number one retirement fear is running out of money. But here's a note of caution: many financial advisors are "flying blind" when it comes to assessing whether clients are on-track to achieve a sustainable retirement income, according to a survey of U.S. financial advisors fielded by Russell Investments.
It seems there is no clear-cut solution on how to determine if clients are effectively planning to meet their retirement income goals. According to the survey, most advisors (34%) said they measure income potential simply based on asset balances remaining after projected distributions. Others (20%) just forecast a projected rate of return. Only 15% of advisors say they take a more detailed ¿ and the study says, preferred ¿ route of projecting assets against liabilities. In other words, a specific approach of detailing income minus expenses.
"Advisors and their clients need a meaningful reference point to discuss sustainable income in retirement, and preservation of principal or a rate of return hold very little meaning for an investor trying to fund a desired retirement lifestyle," said Rod Greenshields, consulting director for Russell's U.S. advisor-sold business. "This reference point needs to be tied to actual desired outcomes. Yet today, very few advisors are approaching retirement income planning in this way."If fact, more than half (53%) of advisors surveyed said they wish they had more planning and implementation tools for retirement income planning.
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