Old School vs. New Rules: Are You Retirement Ready?

Do you remember when you used to get all of your investment and social security statements in the mail? When you had to wait for the next day’s paper to see how the market performed? Times have changed!

A lot of people still think about retirement planning the same way their parents and grandparents did, expecting to rely on pensions and Social Security income to cover all of their post-retirement needs. If they have savings accumulated throughout their working life, that nest egg may be intended to supplement these income sources. Or, it could be meant to provide funds for gradual withdrawal, sometimes without deliberate consideration of investment strategies.¹³

But now, it’s not so simple. We have more investment choices,¹ and the tax implications have become increasingly convoluted. And while older generations tended to downsize their lifestyle in retirement to stretch their dollars, retirees today are living larger.² They want to travel, pamper their grandkids, and more actively pursue their hobbies and interests. All of these things require greater financial resources.

As information availability, investment options and lifestyle expectations have changed, the landscape of retirement planning has shifted along with them. Making plans for your future and making your dreams a reality now require a more self-reliant model, which demands greater financial savvy.

This transition highlights the importance of comprehensive financial planning that considers volatility tolerance, investment audits, and a holistic approach that moves beyond single-focus advisors.We’re looking at six particular areas of retirement planning, how Americans have looked at those factors in the past, and why today’s circumstances present new and potentially better opportunities to address those concerns.

Are you planning for retirement the old way or the new way?

Jump to a topic:

• A Shift to Individualized Retirement
• Dynamic Tax Optimization for Retirement
• Longevity Risk
• One-Stop Retirement Shopping
• Leveraging Digital Platforms for Retirement Strategies
• Conclusion, Disclaimers and Sources

A Shift to Individualized Retirement

Imagine your retirement as a custom-built home. Not a cookie-cutter model from a bygone era, but a unique design tailored to your specific needs and dreams. That's the reality of today's retirement landscape. We've moved from an age of standardized pensions to one of individualized retirement. Gone are the days of relying on a company's promise; now, you are the architect of your financial future.

Just 52 years ago, in a very different financial climate, 44% of private sector workers enjoyed the security of a pension.³ Fast forward to today, in 2023, that number has plummeted to a mere 15%.³ This shift means you're now largely responsible for safeguarding your own retirement assets, without the safety net of a guaranteed income.

The Greatest Generation relied on predictable income sources like fixed annuities, CDs, and pensions. Baby Boomers and Gen Xers, however, have embraced a more investment-driven approach, seeking growth and flexibility in their retirement portfolios. But this comes with its own set of risks and challenges. Unlike their predecessors, who often scaled back their lifestyles in retirement, Baby Boomers are aiming to maintain 80 to 100% of their working income.⁴

So, how do we bridge this gap? At Chamberlin, we offer solutions like a no-fee Volatility Tolerance Analysis, complete with an Investment Audit, to help you understand your risk profile and optimize your portfolio. Or, you can pursue a similar analysis with your current advisor. However, it's crucial to remember that a standard risk profile might overlook important considerations like the bucketing approach, a concept we’ve talked about at length in Learning Center videos.

One of the most substantial changes is the move toward custom, individualized retirement planning. No longer is there a one-size-fits-all solution. You must actively manage your assets and understand the intricacies of distribution. This becomes especially critical when considering large expenses in retirement, such as taxes.

Dynamic Tax Optimization for Retirement

Speaking of… Let's talk about taxes. For many, it's a once-a-year ordeal. You gather your paperwork, hand it over to a tax preparer, and hope for the best. That's tax preparation.

But what if you could take control? What if you could turn taxes from a source of stress into a strategic part of your financial plan? That's where the tax retirement journey begins.

The Tax Retirement Journey involves working closely with a qualified tax professional — someone who doesn't just fill out forms, but who understands your unique financial situation. They'll help you analyze your current tax position, forecast potential tax liabilities, implement tax-efficient investment strategies, and advise you on tax-advantaged accounts.

It's about moving from simply reacting to tax deadlines, to proactively managing your financial future. It's about achieving clarity, confidence, and ultimately, greater financial peace of mind. The tax retirement journey isn't just about saving money in the short term; it's about building a solid foundation for your long-term financial security.

Imagine it less like a sprint, and more like a marathon. It's not just about what happened last year; it's about what's happening this year, and what you're planning for next year. It's about looking ahead, anticipating changes, and making smart decisions now to potentially minimize your tax burden later.

And in today's world, where advancements in healthcare are leading to longer lifespans, long-term financial security becomes paramount. We're facing the reality that many of us will live longer than previously anticipated⁵ (a concept we'll explore in the next section).

This means we must be prepared to support ourselves for an extended period. A proactive approach to tax management is a crucial piece of that preparation, ensuring your financial resources are optimized to support you, not just for today, but for all the tomorrows to come. And that is a journey worth taking.

Longevity Risk

We all want a long, fulfilling retirement. But there's a key danger to address: longevity and the risk of outliving your money. Today, we'll explore this longevity risk and how you can manage it for a financially secure retirement.

According to the World Bank, American life expectancy has generally increased, from just under 70 years in 1960 to 77.5 years in 2022.⁶ This trend, while positive, presents financial challenges.

At age 65, women have an average life expectancy of 86 years, while men have an average life expectancy of 83 years. This translates to an additional 20.8 years for women and 18.2 years for men, according to CDC data.¹⁸ In other words, the older you live, the older you’re expected to live. This means that retirement planning needs to account for a potentially long period of time, even after reaching the traditional retirement age.

Life expectancy has indeed evolved across generations, and it's vital to remember that we're discussing averages here. Our World in Data shows the remarkable progress, with global life expectancy more than doubling in the last two centuries.¹⁴ To illustrate this generationally, we can turn to Social Security Administration data.¹⁵ For instance, someone born around the early 20th century, closer to the Greatest Generation's time, had a life expectancy at birth significantly lower than someone born in the mid-20th century, during the Baby Boomer era. The number of Americans living past 100 years old has also increased significantly, from about 53,000 in 2010 to over 100,000 today.¹⁷ This increase can be attributed to many factors, such as advancements in healthcare and medicine, changing dietary habits and an increased focus on nutrition, reduced smoking rates, and technological progress, like improvements in car safety.¹⁶

63% of people are more concerned about outliving their money than they are about dying.⁷ This underscores the real financial anxiety associated with longevity. Living longer brings financial uncertainties, and also acts as a risk multiplier because those uncertainties and costs tend to increase as we age.

Consider healthcare expenses in particular — medications, treatments, and long-term care. As we get older, these expenses generally trend upward substantially, while we are continuing to draw from our savings.

We have strategies and tools that can help. A bucketing strategy time-segments assets, providing income from 'now' and 'soon' buckets, while the 'later' bucket aims for growth to replenish funds. This balances immediate needs with long-term growth and stability. Long-term care insurance and Medicare supplements can also help offset major healthcare expenses, both expected and unexpected, providing a financial safety net.

Increasing lifespan is positive, but longevity brings financial risk. With long-term planning and appropriate financial strategies, individuals can better navigate the financial uncertainties of living a longer life and can enjoy a secure and fulfilling retirement. Integrating this with your overall retirement strategy could be crucial. In the next section, we'll discuss the holistic retirement plan and how this approach considers all of your retirement needs not as separate distinct parts, but as one cohesive whole.

One-Stop Retirement Shopping

Does it feel like you're juggling to keep your retirement plan in the air? Too often, individuals may find themselves piecing together their financial future with advice from multiple, disconnected sources. A tax advisor here, an investment broker there, a healthcare consultant somewhere else. But your financial life isn't a collection of isolated parts — it's a cohesive whole. That traditional, fragmented approach isn’t just inconvenient; it also increases the chances that one piece of the puzzle might get overlooked or completely fall through the cracks.

The reality is, these concerns are deeply intertwined. A decision about your investments can impact your taxes, your healthcare choices may influence your estate planning, and so on. To truly secure your retirement, consider using a comprehensive, unified strategy. This is where a Holistic Plan comes in. It's a paradigm shift, moving away from siloed advice towards a personalized, all-encompassing approach.

Creating a Holistic Plan embraces individualized, comprehensive strategies designed to secure your entire financial future. Instead of dealing with multiple advisors, each with their narrow focus, you work with a holistic financial planner who sees the big picture. It’s the difference between a cookie-cutter solution and a custom-tailored plan.

Think of it this way: individual disciplines versus a complete, big-picture view. In most cases, a traditional planner focuses on the accumulation phase, using investments and insurance as tools to build your savings in the stage of life before you reach your retirement. Even if they touch on the distribution phase, where you begin to draw from those assets, it's probably not their primary expertise.

And here’s a critical point: Fiduciary Duty. While you seek a planner who understands your unique needs, it's essential to distinguish between advisors legally bound to prioritize your interests and those driven solely by product sales. At Chamberlin, all our advisors are Certified Financial Fiduciaries. This means we are legally required to act in your best interest, not just sell you a suitable product.¹¹ Let's put this into perspective: out of roughly 200,000 licensed brokers, only about 35,000 hold fiduciary licenses. And of those 35,000 fiduciary brokers, only about 5,000 have just the fiduciary license.¹² This is a crucial distinction. It’s about aligning your financial strategy with advisors who are truly committed to your well-being.

So, how do we streamline and enhance this holistic approach in today's digital age? Keep reading as we dive into leveraging digital platforms to optimize retirement strategies, and how technology is revolutionizing the way we plan and manage our financial futures. It’s about making retirement planning more accessible, efficient, and personalized than ever before.

Leveraging Digital Platforms for Retirement Strategies

Balancing a checkbook is a concept that’s foreign to a lot of folks under 40. Why? Online banking changed the way we look at our finances day-to-day. If I want to know how much money is in my checking account at any given moment, I can pull out my phone, open an app, and have a number in a matter of seconds or minutes.

We have more information at our fingertips than people ever have before. And the pandemic showed us we can work differently, too. We don’t have to meet in person now, we have the option to meet virtually on platforms like Zoom.

These online tools are revolutionizing the way we do things in today’s world, and retirement planning is no different. Earlier, we talked about how retirement planning has become more custom, and personalized to each individual retiree. This shift wouldn’t have been as fast or as easy without some of these digital tools. Online access to portfolio accounts and to real-time financial information can provide greater convenience and adaptability for individuals managing their own financial futures.

When the COVID pandemic hit, most of us had to pivot the way we did things in some way or another. For us here at Chamberlin, that meant taking our classes and seminars from in-person events at schools and libraries to also hosting online webinars.

It also used to be fairly common to have regular meetings with a financial advisor at their office to go over account balances, market performance and asset allocations. These days, we do a lot of these meetings virtually instead. We have clients who work a full day at their own office and don’t want to come to ours during their free time — even if they live right here in St. Louis. A Zoom meeting from their house works just as well. That’s part of why our headquarters has multiple Zoom rooms with audio-visual equipment designed specifically for these types of meetings.

This also allows us to more easily work with clients across the country. While we have our “home base” offices, our planners are licensed in 40 states, and people in 48 of the 50 states have participated in our classes and seminars.

Your retirement plan should be as unique and personal as your particular hopes and goals. We want to make sure we’re the right fit for you and that we have a Holistic planner whose specialities and expertise match your needs. To support your active lifestyle, we offer the flexibility and tools to manage your finances on your own time and the option to meet with us in a way that suits your schedule. It’s the 21st Century way of making your retirement dreams a reality.

You’re Not Alone

At Chamberlin, we believe knowledge empowers your retirement. In this post, we've navigated six crucial shifts to show you how retirement planning is evolving. We want you to feel confident and ready to build a retirement that reflects your unique situation. If you've gained a clearer understanding of these retirement strategies, then we've achieved what we set out to do. Your informed decisions are the greatest return on our investment.

Chamberlin is here to help you navigate the options and create a plan tailored to your needs, goals and dreams. Visit our online Learning Center for more retirement resources, and If you're ready to take the next step, we invite you to schedule a call with one of our experienced retirement educators today to take the first step toward a confident financial future.

Remember, your retirement dreams are closer than you think. Don't wait to build the retirement you deserve – take action now!

Disclaimers

Investment advisory services offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser. 

This commentary reflects the personal opinions, viewpoints and analyses of the Chamberlin Group. It does not necessarily reflect the views of Foundations Investment Advisors, LLC (“Foundations”) and is provided for educational purposes only and the contents are solely maintained by and the responsibility of the applicable 3rd party. The 3rd party content is subject to change at any time without notice, and does not represent an express or implied opinion or endorsement of any specific investment opportunity, investment strategy or planning strategy. Foundations in no way deems reliable any statistical data or information obtained from or prepared by third party sources in this commentary, nor does Foundations guarantee its accuracy or completeness. No legal or tax advice is provided or intended.

This is not endorsed or affiliated with any federal Medicare program, nor any U.S. government agency. If applicable, we do not offer every plan available in your area and contacting us will direct you to a licensed insurance agent. Any information we provide is limited to those plans we do offer in your area. Please contact Medicare.Gov or 1-800-MEDICARE to get information on all of your options. This is not endorsed or affiliated with the Social Security Administration or any U.S. government agency. Any comments regarding safe and secure investments and/or guaranteed income streams refer only to fixed insurance products overseen by state insurance regulators and not any investment advisory products. Rates and guarantees provided by insurance products and annuities are subject to the financial strength of the issuing insurance company; not guaranteed by any bank or the FDIC.

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