5 Tips for Helping Your Retired Clients Cope with Spending Their Savings

Mar 28, 2019 12:00:00 AM / by Darwin Bayston, CFA

Helping Retired Clients

Most baby boomers were raised with an ethic of working hard for their whole lives, saving a little money along the way and hoping they would stash away enough in savings to enjoy their retirement years.

            But once retirement actually arrives, that lifelong discipline is suddenly fulfilled. Now it’s time for them to draw down the nest egg they had been building for decades and use that savings to fund the lifestyle they dreamed about for their golden years.

            This transition can be a very unsettling one for your retired clients to make. One study by Age Wave showed that initial discomfort about retirement lasts about 18 months before the level of happiness begins to rise.

“There is a life beyond work, but it can be very unnerving for people making the transition,” said Ken Dychtwald, a gerontologist and the and founding CEO of Age Wave, in an article published by AARP Bulletin.

Financial advisors are in a unique position to help their clients manage the emotional and practical implications of spending down their retirement savings. Based on our conversations with advisors of all stripes — from life insurance agents and financial planners to wealth managers and estate planning attorneys — here are five tips for helping your clients cope with this challenging transition:


  1. Change Their Mindset

    The mental component may be the most important and most difficult to navigate. Help them move from a mindset of accumulation to decumulation by learning to close the “hard work” chapter and open a new chapter of enjoying the fruits of their labor.


  2. Review Their Withdrawal Rate

    Many retirees just need to be reassured that their plans are still sound and sustainable. Sit down with your client and walk through the math to make sure they’re sticking to a portfolio withdrawal rate that is prudent and makes good sense given their age, inflation assumptions and a conservative return projection.


  3. Conduct Assets Inventory

    Go line-by-line through everything they own — both liquid and illiquid assets — and evaluate whether each item is still serving its intended purpose. For example, for most clients, the decision to purchase a life insurance policy came down to the basic idea of trying to provide financial relief for loved ones in the event of their untimely death. But today, many retirees are now in a different place in their life journeys and the reasons they purchased that life insurance policy in the first place may no longer apply like they once did. One option you may want to consider if your client’s life insurance policy is no longer serving its purpose is to sell the policy to a third party in a life settlement transaction.

    If your retired client decides that a life settlement transaction may be a good option for them to consider, any qualified life settlement professional will be happy to review your client’s policy and provide you with a preliminary idea of whether your client might be able to sell the asset for an immediate cash payment. Please visit www.LISA.org to identify licensed life settlement providers and brokers who may be able to assist your client.


  4. Get Comfortable with Numbers

    Another way to combat the emotional challenge of drawing down retirement savings is to raise your clients’ comfort level with the underlying dollars and cents. Walk through the available cash they have on hand and discuss whether they need to raise cash flow by disposing of an asset that surfaced in the inventory, then revisit their allocation of equities and bonds in their portfolio, and point out other numbers so they can see for themselves where they stand once again.


  5. The Most Valuable Asset

Finally, help them to appreciate the importance of swapping money for time and making the most of each day with their loved ones. This is a terrific opportunity for you to come alongside your clients and remind them that Time — not Money — is their most valuable asset.

Darwin Bayston, CFA

Written by Darwin Bayston, CFA

Darwin Bayston is President and CEO of the Life Insurance Settlement Association (LISA). His charge is to extend the outreach of the Association to all participants of the life settlement industry from consumers to capital providers, including producers, brokers, providers and service providers who are part of the life settlement market. He was previously Managing Director of Life Settlement Consulting & Management (LSCM), founded in 2004 and specialized in life settlement policy and portfolio valuations, and life expectancy analysis. He has published several articles and participated as speaker at a number of life settlement conferences. Previous to that he operated an investment advisory firm. From 1980 to 1993, he served in several capacities, including President and CEO the CFA Institute (and its predecessor organizations). While at CFA, he founded the continuing education program, was editor of the CFA Digest and supervised research projects funded by the Research Foundation of the ICFA. He began his career as an investment analyst with a Midwest life insurance company. Mr. Bayston has been Chairman of the Martha Jefferson Hospital Foundation ($100 million), a member of the Hospital’s Finance Committee and a past member of the Board of the Institute for Quantitative Research and Finance (Q Group).