Planning For Your Client’s Retirement Starts Now

Planning for retirement is often overlooked or tossed to the side for years, but saving as early as possible will pay dividends in the long run.

Brandon Millard, Modern Woodmen of America financial representative and 2016 graduate of Loudon High School, knows firsthand the importance of saving for retirement beginning at a young age.

“I definitely see it every day with people that are younger and just starting families,” Millard said. “I get it, it’s not of huge importance because they’re having kids, they’ve got families, they’ve got houses. For example with us, we’re a little bit lower than most companies. You can get started at $50 month, but that’s just one of our options. Just even something like that, you’d be totally surprised how that can perform in a retirement account. It depends on a lot of different factors, but just every little bit you can put in will definitely help. You don’t want to play catch-up later.”

High schools in Loudon County are placing an emphasis on offering financial planning classes for students. Creating a monthly budget is a viable way to keep track of spending and saving, especially for retirement.

Start with a budget

“You’ve got to at least have an idea of what money’s coming in and going out, so budgeting is probably important for everybody,” Brandon Kirkland, Lenoir City High School personal finance teacher, said. “With these guys being seniors, they may not have ever been introduced to that, they may not see at home either because that may be one of the reasons America is in the financial problems we’re in. Trying to introduce it to them so they can get an idea of what budgeting looks like early, I think, is important, too.”

The average retirement age in the United States last year was 61, but most retirees are unable to collect full Social Security benefits until 67. According to the American Association of Retired Persons, the average U.S. retiree earned $1,543 per month from Social Security.

However, tucking away just $50 or $100 a month can reap valuable benefits over a period of decades.

“I get a lot of different folks, but I would say somewhere between 80% or 85% of our clients, are over the age of 67,” Kevin Sheffield, Sheffield Wealth Management owner, said. “Most of our folks are already retired and have went through the hard processes of growing their money to a point where they could retire. Our goal is to continue to grow that at a rate that’s sufficient to them and also a source of income for them.”

“A lot of things are personal, but really the main guideline for that is how aggressive someone wants to be,” Millard added. “We do a lot of questionnaires and having conversations about how aggressive someone wants to be. A lot of people, they can’t handle a lot of up-and-down volatility, and so maybe they need to invest a little bit more than the next person who’s willing to risk it all.”

COVID impact is real

The COVID-19 pandemic proved a difficult challenge for millions across the country and created a slew of financial burdens on many families.

The pandemic sharply impacted those who lost jobs and no longer have access to retirement plans, such as 401(k)s. A MoneyRates survey conducted last March showed that 36.4% of Americans within 20 years of retirement expect COVID-19 to delay their plans.

Financial companies such as Modern Woodmen and Edward Jones have routinely checked in on clients to ensure retirement accounts remain intact.

“For someone who’s been put in a tough spot, I haven’t seen a ton of that,” Millard said. “Like when I start somebody on a retirement plan, one of the best pieces of advice that I give to people is just start with something that you won’t even know that it’s missing. Whether it’s $50 a month or whatever, or maybe they can afford to do $100, well, maybe we’ll just do $75 for now. It’s something you don’t have to think about, they’re not going to miss it later. Part of that, we do a lot of screening on suitability to make sure they have a good savings and that they don’t need to be reaching into their retirement account.”

Putting away thousands in an account that will not be touched for another 30 years or more can be a hard process to grasp early on, but creating a goal or purpose can help serve as a motivational tool.

“The best time to invest is when you have money but, more importantly, saving money and investing for not really knowing why you’re investing, you’re not as likely to stay with it,” Sheffield said. “Sit down with an advisor or if you want to do it online because of cost efficiency, that’s a good thing, too. You go through a simulated retirement program, put some numbers in and see where you’d like to be down the road. What if you wanted to retire at 55? What would you need to do to save that? Ultimately, if you create an actual goal instead of saying, ‘Hey, I do want to retire one day,’ then that will help.”