What's Wrong With Advisors' Retirement Planning Models, and How to Fix It

That's unusual, according to David Blanchett, head of retirement research for Morningstar's Investment Management group, who was also on the panel. "Seventy percent of advisors use age 90 as the age of death for clients regardless of their expected retirement age …  [and] 90 is way too conservative."

The age at retirement is another item that many advisors get wrong, according to Blanchett. On average, people retire about three years earlier than planned, so they need to save more now, rather than less, Blanchett said.

A clearer view of what retirees need in retirement, however, could be accomplished if their expected Social Security payments, along with any pension payments, were included in their retirement plan, according to Blanchett. There is a "need to to quantify the value of [those] nonfinancial assets," said Blanchett. "No one goes broke in retirement because they always have Social Security," but retirement plans only view "assets as income, not income as assets."

Another asset retirees can tap is the equity in their home, Kitces said, explaining that retirees can sell and downsize or enter into a reverse mortgage to access that asset. 

Retirees also have the ability to adjust their spending in retirement if they're concerned about shortfalls. Plans should incorporate flexibility within Monte Carlo analysis of their portfolios to test whether they'll have enough income throughout their retirement, said Michael Finke, professor of wealth management at The American College of Financial Services.

Retirees also need to understand how much of their budget is fixed and how much is variable, which provides an idea about how flexible they can be, Finke said. Retirees concerned about running out of money in retirement could buy a guaranteed income contract, including a qualified longevity annuity contract, to provide income starting at age 85 and "take away a lot of the risk." 

— Related on ThinkAdvisor:

• How Becoming a Social Security Claiming Whiz Can Boost Your Practice
• Finke, Blanchett on 4% Rule: Retirement Success Is Flexibility, Not Fixation
• Clients Born in 1960 Could Take a Big Social Security Hit