15 min read
Most plans need to deal with uncertainty. While most of us are aware of market uncertainty, many are not aware that a client’s longevity is about as uncertain as the market. This can have a bigger impact on the success or otherwise of a retirement plan because, while markets can recover, there is not an equivalent ‘rescue’ for a longer than expected life. It is important for your clients to understand this uncertainty.
Using a range of outcomes and planning for a high probability of success will make your plans more robust. There are also differences in longevity across your clients. The different genders have different experiences and considering a couple is more than just the sum of both people. Putting together a plan requires some understanding of these differences. When it comes to managing longevity risks for your clients, it’s also incumbent on you to understand who really needs their risks managed. Retirees with little wealth will have the majority of their needs met by the Age Pension and the very wealthy will have enough money to never fear running out. Those in between are the retirees who need help to manage their longevity risks.
The final key to a successful retirement income plan will be an understanding of what your client needs to protect. It can be expensive to protect everything, so a targeted approach which manages the risks to retiree clients and ensures their needs will be met for life can provide them with the peace of mind they seek.