section 1 - The American College Online Learning Center

c. But it is more comprehensive because it requires evaluating all assets andsources of income(1) Example: Take a couple; both are teachers and are both entitled tosignificant pensions and Social Security. Their challenge is that they havelimited financial resources to address inflation and other unexpectedexpenses. How their assets are invested and used in retirement may bemuch different than the single person that only has Social Security andneeds to generate current income from his or her financial assets.d. Helping a client identify retirement income needs(1) Involves budgeting (identifying both essential needs and discretionaryexpenses)(2) Identifying retirement goals and objectives(3) Identify legacy goals which can include leaving money and values tofamily, or having some charitable intente. Planning for different time frames and uncertain time framesf. Planning has to consider contingencies (risks) and risk management techniques.(1) Example: You calculate a client’s expenses, but due to a disability, theclient needs nursing care, which could suddenly triple income needs.(2) Example: A client’s parents die young. The clients only expect to live to 82and instead they are still alive at age 92.g. Planning also has to consider tax and legal issues that can undermine the plan.h. Planning has to consider tax strategies that can make the plan more successful.i. The plan has to be successful for the entire lifetime.10. Characteristics of Retirement Income Planning Practicea. It requires comprehensive planning—solutions are dependent on the client’ssituation.b. It requires knowledge across a wide spectrum of issues—solutions arecomplicated.(1) Example: A withdrawal strategy requires inclusion of Social Securityclaiming decisions as some research has shown that deferring SocialSecurity and withdrawing other assets in the interim can be a successfulstrategy.c. It requires customization—no one approach works for everyone, as every client isdifferent. Examples of differences among clients include:(1) Income and resources vary—One client has a significant pension benefitwhile another has Social Security benefits, a 401(k) balance, and asignificant inheritance. A third client has a business to sell that is a criticalto having a secure retirement.(2) Circumstances vary—clients can be married, single, nonmarried couples,same sex couples married according to a State but not Federal law. Theremay be dependent children or grandchildren—or even a living parent whoneeds care.(3) Views of retirement vary—clients can plan to work until they drop, playgolf every day, commit themselves to a nonprofit organization, or carefor family members.1.4