Current market environment performance of dynamic, risk-managed investment solutions.
By David Wismer
Proactive Advisor Magazine has had the privilege of interviewing dozens of financial advisers and wealth managers across the U.S. over the past 11 years. Not surprisingly, retirement planning—and its investment implications—is a topic we frequently discuss.
With over 50 million Americans estimated to be in retirement (based on the number of Social Security recipients) and tens of millions more expected in the coming years, retirement research has become a major industry. Americans aged 65 and older are projected to be the fastest-growing age group over the next 40 years.
There are many scientific, sociological, and quantitative fields of retirement research, as well as areas of focus within the financial-services industry. While not exhaustive, these include the following:
• The impact of increasing longevity
• The roles of life, health, disability, and long-term care insurance
• The optimization and risk management of tax-efficient retirement-income streams
• The sustainability of government programs such as Medicare, Medicaid, Social Security, and Supplemental Security Income (SSI)
• Administration and funding of defined benefit and defined contribution retirement savings plans
• Strategies and tax implications for wealth transfer and estate planning
• Elder health care and wellness programs
• Senior living options
The challenges for society as a whole, and individuals navigating their options, are formidable.
What defines a fulfilling retirement?
Another cottage industry addresses the “softer” side of retirement—how individuals or couples can build a fulfilling retirement and overcome common obstacles that stand in the way.
An informative article, “The Science Side of Retirement,” states,
“… We can use fresh insights from emerging sciences like Behavioral Economics and Positive Psychology, as well as rely on older models such as Maslow’s Hierarchy of Needs to add value and perspective to the retirement planning process.”
Financial advisers play an increasingly significant role in helping their clients look beyond the financial mechanics of funding retirement income needs to first envision, and then build, a path to their ideal retirement lifestyle.
Advisers we have interviewed use various terms to describe their firm’s retirement-planning process in this context, including holistic planning, life planning/life transition planning, financial therapy, behavioral life coaching, values-based planning, and personal economic analysis. Regardless of the name, the objective is the same: helping clients make informed decisions on how they can best optimize their assets to achieve a retirement lifestyle that reflects their personal goals, values, important relationships, and aspirations.
I particularly like one Connecticut-based adviser’s explanation:
“We believe ‘retirement’ is an antiquated term that connotes someone taking Social Security and fading into a sedentary lifestyle. Instead of ‘retirement,’ we refer to that stage of our clients’ lives as ‘Restylement.’ People today want to remain active, whether that means living a robust lifestyle, performing volunteer work, starting a business, or even beginning a second career. We also talk to clients about what we call ‘true success’ as they look to their future. We define this as having a great lifestyle plus money multiplied by the time to enjoy it.”
Flexible Plan Investments (FPI) is proud to partner with advisers as they guide their retirement-planning clients. The firm offers a focus on goals-based investment planning, dynamic risk management, and a range of rules-based strategies suitable for clients across the risk spectrum—seeking competitive returns across full market cycles. FPI’s proprietary OnTarget Investing process helps advisers and their clients set and maintain realistic long-term investment expectations, delivering a customized, personal benchmark in an easy-to-read format.
Life lessons from Harvard’s landmark study
The Wall Street Journal, CNBC, and other media outlets covered the 85th anniversary of the Harvard Study of Adult Development in 2023. This unique research project, which began in 1938, has tracked participants across different socioeconomic groups for generations. As an essay in The Wall Street Journal described it, the study followed “an original group of 724 men and more than 1,300 of their male and female descendants over three generations, asking thousands of questions and taking hundreds of measurements to find out what really keeps people healthy and happy.”
Coincidentally, my father-in-law was one of the study’s original participants and faithfully complied with its requirements his entire adult life until his passing at age 94—as do a remarkable 84% of the participants.
While the ongoing study has uncovered many important and interesting insights, Director Dr. Robert Waldinger and Associate Director Dr. Marc Schulz emphasized one key finding for The Wall Street Journal:
“Through all the years of studying these lives, one crucial factor stands out for the consistency and power of its ties to physical health, mental health and longevity. Contrary to what many people might think, it’s not career achievement, or exercise, or a healthy diet. Don’t get us wrong; these things matter. But one thing continuously demonstrates its broad and enduring importance: good relationships. …
“Over and over again, when the participants in the Harvard Study reached their 70s and 80s, they would make a point of saying that what they valued most were their relationships with friends and family. If we accept the wisdom—and, more recently, the scientific evidence—that our relationships are among our most valuable tools for sustaining health and happiness, then choosing to invest time and energy in them today becomes vitally important. It is an investment that will affect everything about how we live in the future.”