Too often, we hear stories that many younger workers don’t even contribute to their 401(K) plans at work even when the employer offers a matching contribution that is basically free money. Retirement savings can occur within employer-sponsored retirement plans, traditional and Roth IRAs, regular savings accounts, investment accounts and mutual funds, cash value life insurance and annuities. Annuities come in many variations. A new variation that hasn’t picked up steam yet is qualified longevity annuities or QLACs that only distribute out at advanced ages, such as 80 to 85. They were designed specifically to combat longevity risk.

Clients should be cautioned against any one-size-fits-all approach, as longevity planning is a very individualized process and there is no one financial savings tool or strategy that meets everyone’s needs. In the right circumstances, even reverse mortgages are appropriate, but they are complicated strategies that should be examined carefully. The one fact that can’t be ignored is the power of compounding. The earlier your clients save and invest, the more they will have because of investment growth over time.

Numerous studies have shown that in addition to sources of income, retirees should have various types of savings accounts. For instance, some would be taxable accounts such as bank or securities accounts. Others might be tax deferred such as qualified retirement accounts and traditional IRAs. Others could be tax-free sources such as Roth IRAs, life insurance cash values or government bonds. Careful distribution from these accounts during retirement would allow the retiree to effectively manage income taxes, and also allow their savings to last as long as possible.

Talk with your pre-retiree clients about staying in the workforce longer to offset a longer life expectancy. Working longer allows for increased savings during those working years as opposed to depletion of income sources. Working longer may also have a positive impact on pension payments as well as increasing Social Security benefits because of the way these benefits are calculated. For married couples, claiming Social Security at a later age would also be an important decision because delaying these benefits for the primary wage earner — beyond the normal retirement age — allows for increased Social Security payments, which may also impact survivor benefits. Too often, retirees claim their Social Security benefits as early as possible, but that results in a reduced benefit that will hurt them in future years.

Retired clients often think they do not need life insurance anymore because the house may be paid off, the children are out of the home, there's no income to protect, etc. Life insurance actually allows a retiree to spend and enjoy retirement more because the retiree no longer has to worry about consuming all of his or her assets and leaving this earth without providing a legacy to family members. Cash value accumulation in permanent life insurance products can supplement retirement income while the death benefit serves to provide a legacy and inheritance to family members. For wealthier clients, life insurance can also be a hedge against the potential loss of wealth due to estate, gift and income taxes. An insurance discussion with your clients can be complicated but eye-opening with respect to how little the average person really knows about the topic.

Traditionally, we’ve always heard that as an individual ages, the investment portfolio becomes less equities driven and more fixed income heavy. That advice may be old thinking. There are many recent studies showing that a healthy dose of equity investing should be continued during retirement because retirement can now span 30 years or more. A more heavily weighted portfolio of equities may actually increase the longevity of the portfolio, increase spendable income and keep pace with inflation. Your high net worth clients may also have the luxury of delaying Social Security benefits, and thereby increasing those benefits that may further protect the investment portfolio.