What Does It Mean to Be a “Retirement Specialist”?

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The Rodgers & Associates logo includes “The Retirement Specialists.” The home page of our website says we “specialize in financial planning for those who are retired or expect to retire within five years.” What does it mean to be a “retirement specialist?” What expertise should be required to be able to identify yourself as a specialist in retirement?

There are probably a lot of people in the financial services industry that say, “I specialize in retirement” or “I have a niche with retirees.” Possibly, they make this statement because they manage retirement portfolios or sell retiree-related products like annuities and long-term care insurance. Portfolio management and insuring against an extended stay in a skilled care facility are issues often faced by retirees.

However, it does not define retirement expertise by my way of thinking. I believe an adviser who truly specializes in retirement planning and working with retirees needs to be able to do more than just focus on a client’s retirement portfolio. It should require a deep understanding of the strategies and issues that are unique to retirees.

What you should look for in a retirement specialist

A retirement specialist should understand how generating cash in retirement is different than just owning a diversified retirement portfolio that grows over time. Most retirees take ongoing withdrawals, but returns from investments can vary greatly from year to year. That makes proper management of the different returns you receive critically important. A decade of weak financial markets early in retirement may deplete the portfolio to the point that when growth finally comes, there’s not enough left to recover. The adviser will need to have a strategy for managing the portfolio in the event a bad sequence develops.

Understanding a retiree’s needs and knowledge of a portfolio’s risk

This is where the adviser needs a special understanding of the retiree’s grasp of and tolerance for risk. Holding an investment portfolio through a bad market is scary enough while you are still working. A retiree dependent on portfolio income could find bad markets absolutely terrifying without a plan for handling them.

Retirement specialists must prepare retirees for bad markets before they happen. Panicking could lead to making bad investment decisions during down markets.

Portfolio management and retirement income strategies just scratch the surface of what it really means to specialize in retirement and working with retirees.  A retirement specialist must also have training in other important areas.

A retirement specialist should understand the importance of Social Security benefits

The importance of Social Security benefits to today’s retiree cannot be understated. The Bipartisan Budget Act of 2015 changed many popular claiming strategies. However, there are still many ways for seniors to maximize benefits. One of the most important questions an adviser needs to answer is – when should a retiree start drawing benefits?

There are many factors that impact the answer and a retirement specialist needs to know how to get to the right answer for each person. There are special rules for divorcees and widows/widowers that could have an impact on this decision. Some married couples are not subject to the changes from the Budget Act of 2015.

There are also strategies that could undo mistakes retirees have already made by drawing benefits too early. Determining the optimum time to draw Social Security benefits in order to maximize them is a critical skill needed for any retirement specialist.

Medicare benefits and what your retirement specialist should know

Medicare is a valuable source of health insurance for retirees and healthcare expense is one of their top issues. There are four parts of Medicare:

1) Part A: hospital insurance

2) Part B: physician and outpatient coverage

3) Part C: Medicare Advantage plans

4) Part D: coverage for prescription drugs

Determining when to enroll (or delay), whether to enroll at all and if so, what choices to make within each plan can be extremely confusing. A retirement specialist can help navigate this complicated system.

Another important component to this decision is whether Medicare coverage alone will be enough. The retiree may need a Medigap supplemental policy and there are many choices to consider in the Medigap arena as well.

Income taxes can impact a retiree’s Social Security benefits

A retirement specialist needs to be well versed in tax laws. While someone is still working, there are not as many options for controlling taxable income. A retiree can potentially have many options to save on taxes especially if their retirement savings have been well planned.

Preparing for retirement is an area where a retirement specialist can provide valuable assistance. Up to 85% of Social Security benefits can be subject to income taxes. Planning when to draw benefits, structuring distributions from retirement accounts, and charitable gift planning can help minimize the taxation of Social Security. Medicare premiums are now means-tested. Those with higher income pay more in monthly premiums. Tax planning now plays an extremely important role in keeping the cost of medical insurance down.

A retirement specialist’s knowledge of a retiree’s housing needs must be diverse

There are also many other issues such as housing lifestyle choices and whether to “age in place” or utilize a Continuing Care Retirement Community (CCRC). Is this the house they want to stay in? Can they stay in it? In other words, is their house compatible for an aging-in-place strategy? Would they need to make modifications to the home? They will also need advice if they decide to leave and go to a CCRC.

Choosing the right community will be a very important decision. How much will they pay upfront to get in or on an ongoing basis? What impact will this expense have on the retirement budget? Which retirement community has the best facilities based on their preferences? A retirement specialist should be able to assist them with the choices and guide them through their options.

There is also the issue of housing wealth.  Should the retiree leverage the value of their retirement residence as an asset to make the retirement plan work? Should they sell the house and downsize? Sell their house to a family member and lease it back? What about accessing their equity through a reverse mortgage?

These are only some of the issues that retirees face and may need help with, and this is the kind of expertise advisers require to truly differentiate themselves as being retirement experts. So how does an adviser learn to be a retirement specialist?

The College for Financial Planning offers a course for CFP®s who choose to specialize in retirement. The Chartered Retirement Planning Counselor℠ or CRPC® designation is the nation’s premier retirement planning credential according to the College.

The CRPC® program covers all aspects of the retirement process in a single comprehensive program with no product or advising biases. Rodgers & Associates requires all their CFP®s to earn the CRPC® designation after they start working for the firm. We feel that to specialize in advising retirees, one needs the proper training to provide appropriate guidance on the important issues they face.

Rick’s Tips:

  • A retirement specialist must have a deep understanding of the strategies and issues that are unique to retirees.
  • Determining the optimum time to draw Social Security benefits is critical to a successful retirement.
  • A retirement specialist should be able to help retirees navigate the complicated Medicare system.

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