Consider pre- and post-retirement advice

Many advisers have not yet come to terms with providing advice to people across a variety of life stages, it has been claimed.

Thursday, February 9th 2017, 6:00AM

Ralph Stewart, managing director of annuity provider Lifetime, said New Zealanders needed to be encouraged to think about how they would transition to a time when they needed more support, to enable them to retain their independence.

“What age will you be retiring, what will your monthly expenses be, and hardest of all, how long do you think you’ll live? How is your health now and what do you imagine it might be like in 20 years’ time? Some of this will always be guesswork but at least it will give you a plan and a financial goal to work towards.”

Stewart said, as well as considering whether they would have enough money for things such as increased healthcare costs, people could give thought to whether they could make alterations to their homes to allow them to remain there longer, or whether they needed to move to a community where they had easier access to things such as a local GP or a support network of family or friends.

He said this type of planning was not something that many financial advisers discussed with their clients, but was useful as part of a bigger picture.

“In practise it’s a relatively ‘soft’ space and fits very well with a holistic approach to providing financial advise. In general however providing advice to pre- and post-retirees is specialist field and evolving. We find some (but not the majority) of advisers grasp that it is advice for life, with the retirement cycle exceeding 30 years," he said.

“Multiple life events occur during this time which require specific and deliberate advice. For example, how much can I spend for the next 30 years and not worry?, how I do I manage not knowing how long I will live? How do I transition into requiring greater levels of support that I require today? When you combine, investment risk, with longevity risk and the pure practicality of ageing, it becomes very complex – never in our view has there been a better opportunity for holistic, evidence and fact-based advice than there is in the retirement sector.”

Tags: Ralph Stewart Retirement Income Group