As the director of the AgeLab at the Massachusetts Institute of Technology, Joseph Coughlin knows far more than just a thing or two about retirement. During a data and humor-filled presentation at the IRI Vision Annual Meeting in Chicago, Coughlin dissected the demographics and economics that are changing the face of retirement. “Let’s retire the notion of retirement that our parents once enjoyed,” Coughlin said. Here are a few more nuggets from Coughlin’s “Disruptive Demographics” presentation:
- Retirement planning is no longer “personal” in that roughly 50% of people are concerned they may be caring for one or both of their parents when they themselves approach or enter retirement.
- In the past people feared their own poor investment choices could place a strain on retirement planning. Now investors fear gridlock in Washington and a “broken financial system” stand to do them more harm.
- Much like how people hear/read about an ailment and then self-diagnose when they visit their doctor, Coughlin says investors will research investment products on their own, then seek confirmation from their advisor. Advisors should be proactive and send clients information on new products and strategies.
- Advisors must be flexible in how they interact with clients. Coughlin explained that if an advisor wears a crisp power suit to a meeting with a younger investor, that investor might view the advisor as a member of the “slick” financial services industry that caused the financial crisis. Conversely, if the very same advisor does not wear a crisp power suit to a meeting with an older investor, the investor might think the advisor lacks expertise and doesn’t take money management seriously.
- Advisors must involve wives in retirement planning sessions. Women are outliving men, so if the husband dies and the wife doesn’t have a comfortable relationship with the advisor, she will take her business elsewhere.
- Coughlin jokes that Europe is essentially a continent of geriatrics. But Americans shouldn’t laugh, because demographic trends indicate the U.S. is headed that way soon. In fact, Coughlin says the entire U.S. is 10 or 15 years away from looking like Florida.
And finally, Coughlin said the retirement industry has a chance in the next 3 to 5 years to change the lexicon around longevity planning and products. Should the industry seize that opportunity, it stands to re-shape how we live retirement and how much it will cost.