Building the Momentum for Retirement

By Brian J. Cunningham, CFP®

Everyone wants to retire as a millionaire. Depending upon projections based on the lifestyle you aspire to and your life expectancy, you may find yourself more comfortable with at least a few million saved. Unless you are independently wealthy or a big lottery winner, that means making financial decisions as early as your 30's to achieve your objectives. I am encouraged by the increasing number of Gen X (41-56) and Gen Y/Millennials (25-40) seeking my counsel to plan for their retirements.

Starting Early

Typically, my younger clients benefit from high salaries; many are in double-income families, have purchased their first homes, and have children. They are financially savvy, understanding that it will take more than a steadily increasing income to meet their retirement goals. They know that while they are saving for their retirement, they will have other financial obligations along the way, like home repairs or upgrades, buying automobiles, paying college tuition, footing the bill for weddings, and so many other costly life events. 

Under the Limit

Younger clients are often unsure about where to seek retirement advice. They see the advertising directed at older people and may respond. These companies promote a path to an idyllic retirement full of happy grandchildren and world travel. But when these younger clients make an appointment, they find that although they would benefit from this type of financial consulting, their net worth doesn't reach the limit imposed by many of the larger firms. 

Some of my colleagues will only work with clients once they achieve a certain level of financial success. So those hard-working, high-income, low assets folks can have difficulty finding an advisor willing to work with them. In some cases, the advisor isn’t allowed by their company business model to engage with them. On the other hand, some of the financial planners who do target this younger group may take advantage of their clients’ lack of experience. They may not invest enough time in developing a plan that truly meets the best interests of these younger clients.  

Any Size Algorithms

If they haven't tried working with another retirement adviser before they reach me, they may have accessed one of the many online programs that utilize algorithms to plan their future. This choice is more typical with Millennials, who grew up finding all the answers on their phones. Although these platforms claim to generate customized retirement plans, they all ask the same questions. As a result, the outcome is a "one size fits all" formula based on numbers with no regard for personal preferences like risk tolerance, which is a crucial consideration for my retirement plans.  

Thoughtful Planning

One of the reasons I chose to become an independent wealth manager is because I embrace the opportunity to help younger clients develop thoughtful, balanced, and well-researched retirement savings plans early in their careers. As a Gen Xer myself, I can relate to the challenges they face and look forward to guiding them throughout the decades before and after their retirement. 

Organizing Assets

I explain to my younger clients that although I am a wealth manager, in their case, I'm working with them to potentially build their wealth. It's a distinction that I believe they appreciate, and it creates a foundation for a long-lasting relationship of mutual trust, respect, and friendship. We start our engagement by reviewing all their assets, including bank accounts, shared and individual investments, 401(k)s, IRAs, college accounts, etc. They find it reassuring to see all their assets neatly organized in one place.  

Future Dreams

Then we have a frank discussion about how they envision their retirement in the decades ahead. This talk can be a revealing exercise. Especially for couples that know where they want to be and assume their partner feels the same way. We talk about their families, career goals, desire to travel, owning a vacation home, financial support of parents, adult children, and grandchildren, and other factors they might not have considered. These variables impact the final number they will need to save to "comfortably" retire with a monthly income drawn from their investments. 

Identifying Risk Tolerance

Usually, when we get to this point in our consultation, my clients realize that they will not reach that number without developing an investment plan. Before I can help them with this step, I must determine their risk tolerance. Some younger investors seek high growth opportunities and embrace volatility; others may be conservative and fearful of putting their funds at any risk. I educate them on the different types of investments, and we discuss how their plans may change throughout the years to accommodate their life changes.  

Constant Communication

Once we have a retirement plan in place, we continue to work together with meetings or calls scheduled to review our success in achieving their goals. They have confidence that even though we might not frequently talk during the year, I'm constantly monitoring the investments in their portfolio. If I see an opportunity that will benefit them or an economic change that may impact them, I will be in touch. Since my client relationships become friendships, it's always a pleasure to check in to see how they are faring throughout the year. They know if they want to talk, I'm just a phone call away.

The opinions voiced in this material are for general information only and are not intended to provide specific advice on recommendations for any individual. All investing involves risk including loss of principal. No strategy assures success or protects against loss.