Retirement Planning Q&A With the FinServe Network

Exploring Modern Retirement Planning Trends

• Retirement planning is not the same as it once was. Longevity and other parts of the retirement landscape have changed things in a major way.
• The people side of retirement planning is crucial. It’s not just about making sure all the numbers add up.
• Tax knowledge is no longer just a bonus that’s nice to have. Tax planning can be critical to clients achieving a comfortable retirement.

What Does Retirement Look Like Today?  

The American College of Financial Services spoke with Dave Valdez, AIF®, CLU®, ChFC®, and Heather Welsh, CFP®, AEP®, MSFS, to discuss modern trends they’ve been seeing in retirement planning. In our discussion, Valdez and Welsh gave several eye-opening answers that advisors should be considering as they reimagine how they look at modern retirement planning.

Retirement Planning for Longevity

When speaking on how retirement has changed over the last two decades, Valdez and Welsh each cited several common themes. Both cited longevity as a major factor that has shaped how they look at retirement differently. Valdez said, “Retirement just isn't what it used to be. When I started in this business 20 years ago, retirement was a finish line ... We're planning for 30-year retirements now, not 15. It impacts how you invest, how you think about taxes, and how you talk about purpose. The old playbook doesn't really work anymore.”

Welsh expressed a similar sentiment in her answer. “Longevity has become a much more central planning variable. The possibility of a 30-year retirement is no longer a tail risk — it’s a baseline assumption we plan around.”

“Retirement just isn't what it used to be. When I started in this business 20 years ago, retirement was a finish line ... We're planning for 30-year retirements now, not 15. It impacts how you invest, how you think about taxes, and how you talk about purpose. The old playbook doesn't really work anymore.”

Dave Valdez, AIF®, CLU®, ChFC®

The research confirms that Valdez and Welsh are right on the mark. According to a study conducted by The College and the Nationwide Retirement Institute, the number of Americans living to age 100 or older could quadruple by 2054.¹

As both stated, planning for a 15-year retirement is no longer a risk advisors can afford to take.

Retirement Income Tax Planning Strategies

Both FinServe ambassadors also spoke on the importance of incorporating tax knowledge into their retirement planning practices. Welsh said, “Tax planning isn’t a separate workstream for us. It’s woven into the financial plan from the start. The plan is the foundation which surfaces asset location, cash flow needs, legacy desires, charitable goals, and bracket exposure across the retirement horizon.”

When asked about the same topic, Valdez stated, “Tax planning isn't a separate thing we do. It's baked into every retirement conversation. We're looking at where the money's sitting, what order to pull it out, when to do Roth conversions, when to harvest gains, when to give charitably and how.”

Their sentiment is fairly clear. Retirement planning and tax planning are not separate. In order to achieve a successful retirement plan, an advisor needs to understand tax laws. They need to help clients adjust various factors such as distribution sequencing, tax brackets, Roth conversions, and more.

What Do Pre-Retirees Want to Know When Planning for Retirement?

The same questions tend to arise for most people when discussing retirement plans. Valdez listed several common concerns for clients hoping to plan their ideal retirement:

• When can I retire?
• Can I help my kids and grandkids?
• Do I have enough?
• When should I take Social Security?
• Should I be doing Roth conversions?
• What happens to my spouse if something happens to me?
• How do I help the kids without messing them up?

Welsh states that many of the questions she receives generally align with these as well. A noticeable theme that she points out is that they can all relate to the two topics we had previously discussed: longevity and tax. Many clients worry about outliving their money, when they should take Social Security, and more. However, all of these topics can be tied to the two broader categories of longevity and tax.

How Do You Build Relationships With Clients?

As they discussed their answers, both Welsh and Valdez spoke to the importance of understanding clients and relating to them on an emotional level. Welsh said, “The most surprising thing for many advisors is how much the emotional and psychological dimensions of retirement planning matter — often more than the financial mechanics ... Retirement isn’t just a financial transition — it’s a personal one.”

Valdez felt similarly, sharing his own sentiments on the importance of building relationships with clients. “Retirement planning isn't a transaction anymore. It's a 30-year relationship with the client and their heirs. And clients aren't just hiring you; they're hiring your firm/team. A team is crucial in providing continuity and planning for a client for the long term. The advisors who'll do well over the next decade are the ones building teams that can deliver consistently whether they're in the room or not. It's important to have a deep bench of associates, real succession plan, and a team that a client can trust.”

Both Welsh and Valdez spoke on the importance of developing a strong understanding of who your clients are as people, trying to grasp their personal goals as well as their financial goals, and being emotionally available to them as they undergo the major life changes that retirement represents.

As the conversation drew to a close, both also spoke on the benefits of specialization. Welsh said, “Retirement planning is increasingly a team sport, and advisors who try to do it alone are leaving value on the table for their clients. The complexity of today’s retirement spanning tax planning, estate planning, healthcare, behavioral coaching, and income planning requires coordinated specialization.”

“Retirement planning is increasingly a team sport, and advisors who try to do it alone are leaving value on the table for their clients. The complexity of today’s retirement spanning tax planning, estate planning, healthcare, behavioral coaching, and income planning requires coordinated specialization.”

Heather Welsh, CFP®, AEP®, MSFS

Retirement planning is a multifaceted task, and it requires several forms of expertise for a client to achieve the retirement they’ve always dreamt of. Tax, philanthropic planning, and long-term care planning are just a few of the various subsections under the retirement umbrella that can be important to clients, but as an advisor, you’re expected to have the answers. As Welsh stated, this is best done through a team of specialists working to help clients achieve their goals.

Ultimately, there’s a lot more to modern retirement planning than just looking at balances and determining percentages that will allow clients to spend how they want. Retirement planning is a practice with emotional weight, multiple necessary knowledge areas, and more.

Valdez summed it up best, “The thing that surprised me early on was realizing the math is often the easy part.”

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More on Retirement and Tax Planning

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• Watch our podcast on the secrets of retirement spending
• Learn how to permanently lower lifetime taxes from Ed Slott 
• Read more about the “Planning for a Century of Living” research
• Meet our FinServe ambassadors