One piece of the income planning discussion should be a candid review about whether the client needs to continue working, according to financial planners.
A recent launch of an employment website for older workers, PrimeCB.com, by Careerbuilders.com, Chicago, lends credence to that concept.
In building the website, CareerBuilder did an online survey that found 22% of employers saying that, given the shortage of qualified workers, they are planning to rehire retirees from other companies in 2008. In addition, 14% of employers plan to provide incentives for older workers to stay longer; 60% of workers age 50+ plan to look for work elsewhere after retiring; 51% plan to retire after age 65; and 16% plan to retire after age 70. Women were more likely to put off retirement than men, according to the findings. (Harris Interactive conducted the survey in late 2007.)
So, should financial advisors have a conversation with about continuing to work in the retirement years? Advisors contacted by Income Planning weigh had a lot to say about that.
The topic is not a hypothetical one, points out Roger Stinnett, a certified financial planner in Beverly Hills, Calif. It's real, he says, recounting a recent session in which he had to tell a client that the client does need to keep working. Fortunately, Stinnett says, the client likes to work.
Suzanne Krasna, a certified financial planner in Walnut Creek, Calif., says that over the years, her firm has had to deliver the "disappointing news" to many clients. But, she notes, there are "successful stories" here. These involve clients who took the advice and worked a few more years or retired and worked part time or on a contractor basis.
For some, she notes, work was important because they needed to keep their group medical insurance. Others had debt from credit cards that needed to be paid off before they could afford retirement, Krasna says.
Recently, Melanie Woloz had at least 2 clients that she has recommended continue to work. A certified financial planner based in Los Angeles, Woloz says that, for one client reviewed in December 2008, she recommended waiting until June of 2009 to retire. This was based on the client's age and assets. The second instance involved a new client who wanted to retire in March of 2008, but did not have sufficient income to meet expenses. That prompted Woloz to advise once again against the preferred retirement date. "We compromised and he's working part time," she said.
Jim Saulnier, a certified financial planner based in Fort Collins, Colo., recounts how he had to tell several clients that they need to work longer before retiring. "Having to explain this to clients is never pleasant, but is a very necessary aspect of my work as a retirement planner," he says.
