Employed Septuagenarians: Working With the Older Client

The concept of retirement has evolved significantly over the years. While traditional retirement often meant clients completely stepping away from work by their early to mid-60s, today’s reality is quite different. Many septuagenarians—individuals in their 70s—continue to work, whether out of financial necessity, personal fulfillment, or a desire to remain engaged in their professions.

For financial professionals, assisting these older clients requires a nuanced approach. These individuals have unique considerations, including a shorter life expectancy, existing Medicare and Social Security benefits, the tax challenge of RMDs, concerns about long-term care, and the growing risk of diminished capacity. Understanding these individuals’ financial and personal priorities is essential to providing guidance that helps them navigate their retirement years with confidence.

Shorter Human Capital and Life Expectancy: Planning for the Years Ahead

One of the key factors in retirement planning for septuagenarians is their comparatively limited time horizon. Unlike younger clients, whose financial plans may span several decades, older workers have a shorter time horizon in retirement. This means financial advisors must focus on helping the client utilize what they have for income rather than seek to accumulate more for retirement.

Further, simply because of their age, these individuals’ ability to continue working, in other words their human capital, is reduced. Even if they “ride a desk” for a living, once they are in their 70s, they must recognize that their working potential is limited. Either their own health, or that of a loved one, may require them to step away from active employment in the near future.  

A common concern for this age group is whether they have sufficient savings to support themselves through their remaining years, particularly if they need to retire sooner than expected. Some may have been so confident in their ability to work that they have not been good savers. Advisors should assess their client’s financial situation and adjust retirement plans accordingly, ensuring that income sources align with their needs while also taking potential health challenges into account.

Medicare and Social Security: Maximizing Benefits

Most septuagenarians have already signed up for Medicare and Social Security, two essential pillars of retirement planning. However, even if they are receiving benefits, there are still considerations regarding how best to utilize these programs.

Medicare

Since Medicare becomes available at age 65, most employed septuagenarians already have coverage. If the client still receives medical insurance through their employer, advisors should assess whether the client has also enrolled in any Medicare programs, such as Medicare Part A, which is free. Further, they should prepare the client for the transition from their employer’s healthcare plan to Medicare once they leave work. The individual has a limited time after leaving employment to sign up for the other Medicare programs without incurring a lifetime penalty.  

Social Security

Individuals in their 70s are presumably already collecting Social Security benefits. They should prepare for the fact that when they go on Medicare for their health insurance coverage, their Medicare premiums will be deducted from their Social Security payments. This could impact their cash flow if they’re used to having health insurance premiums withheld by their employer from their pay.

If the client has been on Medicare while working, a possible positive cash flow effect may be that leaving employment will lessen their exposure to higher Medicare premiums due to IRMMA, the income related monthly Medicare adjustment. Without wages coming in, the retired septuagenarian may actually end up paying less for Medicare, and that means less coming out of their Social Security payments.  

Required Minimum Distributions (RMDs): Managing Withdrawals and Taxes

For employed septuagenarians, RMDs pose an additional financial consideration. By age 73, individuals must begin withdrawing minimum amounts from certain tax-deferred retirement accounts, including traditional IRAs and 401(k)s. These mandatory withdrawals can significantly affect both cash flow and tax liabilities, and financial advisors must help clients navigate these implications. There are two major planning considerations when they turn age 73. First, they can defer taking RMDs until April 1 of the year following turning age 73, but that has the effect of requiring them to take two RMDs in the same year – potentially raising their income tax liability in that year. The second issue is whether they want to use any of the strategies available to either delay or avoid RMDs.

How RMDs Impact Cash Flow

While continued employment may provide steady income, RMDs can suddenly introduce additional liquid assets into a client's financial picture. If the client does not need the funds for immediate living expenses, advisors should first explore whether some of the RMDs can be delayed because of the “still-working” exception that applies to the retirement funds in their employer’s plan. This delays RMDs for at least some of their funds. For the remaining funds that are subject to RMDs, reinvestment strategies should be considered to maintain tax efficiency while optimizing the use of the RMD withdrawals.

Tax Implications

RMDs are fully taxable as ordinary income. This income can also expose them to additional Medicare premiums because of the IRMAA rules. However, there are some key strategies to mitigate RMD-generated tax liabilities. These include:

• Qualified Charitable Distributions (QCDs) — Individuals can donate up to $108,000 (in 2025) each year directly from their IRA to a qualified charity, reducing taxable income.
• Qualified Longevity Annuity Contracts (QLACs) — Individuals can invest part of their qualified funds and IRAs into a deferred income annuity that will begin payments later in life (as late as age 85). An advantage of this approach is that RMDs on these funds are deferred until the annuity begins paying out.  
• Tax-Efficient Investment Planning — Consider using RMD funds to invest in tax-advantaged accounts, such as Roth IRAs (if eligible) or low-tax investments.
• Strategic Withdrawals — For clients with multiple retirement accounts, prioritizing withdrawals from different sources can help manage tax exposure.

Proactively addressing RMDs within a broader retirement plan ensures that clients do not experience unintended tax burdens while continuing to work.

Long-Term Care Needs: Preparing for the Future

One of the most pressing concerns for older clients is the cost of long-term care. As individuals age, the likelihood of needing assistance—whether in-home care, assisted living, or a nursing facility—rises significantly. Long-term care can be expensive, and without proper planning, it can quickly deplete savings. Options to address this risk include:  

• Long-Term Care Insurance — If the client has a policy in place, advisors should review the terms and ensure the client fully understands the benefits. If they do not have coverage, it may be challenging to obtain a policy due to age or pre-existing conditions.
• Hybrid Policies — Some life insurance policies and annuities offer long-term care riders, allowing clients to tap into their death benefits for care expenses while living.
• Self-Funding Strategies — Clients with sufficient assets may opt to set aside a portion of their savings specifically for care needs, utilizing strategies such as annuities, trusts, or liquid reserves. They may also choose housing that allows them to transition, such as a Continuous Care Retirement Community (CCRC).
• Medicaid Planning — As an option of last resort, advisors should explore Medicaid eligibility for long-term care benefits. This benefit is income and needs based, so it should only be used as a backstop if other funding sources aren’t available.  

Planning for these expenses should be approached carefully to ensure that resources are allocated appropriately while maintaining financial independence.

Risk of Diminished Capacity: Safeguarding Financial Well-Being

As individuals age, there is an increased risk of cognitive decline, which could impact their ability to both continue their employment and manage their finances. Financial professionals should proactively discuss trust planning, powers of attorney, and guardianship arrangements to ensure that their clients' interests remain protected. Actionable steps include:

• Powers of Attorney — Encouraging clients to designate trusted individuals to manage both their health and financial decisions in case they become unable to do so themselves.
• Living Will/Advance Directive — Ensuring clients have legal documents outlining their medical preferences in the event of an emergency.
• Trust Planning — A trust may provide maximum flexibility in defining when the individual is no longer legally competent, and how finances will be handled at that point.  
• Estate Plan Review — Regularly updating wills and beneficiary designations to avoid complications later on.
• Fraud Protection — Older individuals are often targeted by financial scams. Advisors should educate clients about common fraud schemes and help implement safeguards in advance to protect their assets.

By addressing these concerns early, the client is in a better position to continue working as long as they desire. Planning provides peace of mind that they will have financial security if something goes wrong.  

While employed septuagenarians may differ in their motivations for remaining in the workforce, they all share common concerns about life expectancy, healthcare, long-term care, and cognitive decline. And they want to make the right financial decisions that help maximize their income and tax planning. Advisors who take the time to assess their clients’ needs, optimize benefits, and prepare for potential challenges can help older workers transition smoothly into retirement.

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