Advisers must discover what a client’s perception of a successful retirement is and develop quantitative measures that can determine if and how the desired results can be met to recommend a prudent retirement strategy, a technical expert has said.
“When I think about what a retiree might say when asked what a successful retirement might look like to them, they might be things like ‘I want to make sure I can afford those non-negotiable expenses [such as water bills] no matter how long I live’,” Accurium SMSF technical services manager Melanie Dunn said during the actuarial firm’s latest webinar today.
“They might want to understand what they can afford to spend so they can afford that desired lifestyle for as long as possible and maybe spend a little more from time to time so they can enjoy their retirement.”
Further, retirees often express a desire to leave some savings to their children when they eventually pass away, Dunn observed.
She then suggested certain success criteria advisers might consider to measure the ability of a strategy to achieve the desired outcomes.
“[For the first objective] we might want to understand whether we have a guarantee that we can pay those non-negotiable expenses for life,” she noted.
“[Regarding the next objective] we want to maximise spending to life expectancy with high confidence.
“And we want the capacity to provide an estate value.”
She pointed out it was critical for advisers to recognise the retirement objectives clients name might conflict with one another, for example, wanting to maintain a luxurious lifestyle while also leaving some savings for future generations.
“[As such] it is important our analysis allows for the comparison of outcomes across these success measures so that we can understand the trade-off of prioritising one of these measures over another,”
