The latest Economic Survey for 2018-19 mulled of raising the retirement age in India to 70 due to rising life expectancy, falling fertility rate and ageing population in India. “Since an increase in the retirement age is perhaps inevitable, it may be worthwhile signaling this change well in advance – perhaps a decade before the anticipated shift – so that the workforce can be prepared for it," stated the survey.
This trend indicates that your clients need to take retirement more seriously. For most people, saving for a goal as far as retirement is not a priority. Ideally, saving for retirement should start during the early phase of people’s career. But convincing clients to think long term can be a tall order. So how do you go about it?
Dr. Sarah Newcomb, Director of Behavioral Science at Morningstar, says that the first thing advisers can tell their clients is to visualize how their retirement will look like. “Think about what your life in retirement looks like. Don’t keep it vague. Force detail into the picture. What will your home look like? How do you see your travel plans? What sort of social life do you envisage? Doing this will make the far-away future feel closer. And provoke you into action,” says Sarah.
People do not have a real sense of what their actual expenses are and consider them exceptions. Sarah recommends that advisers should look at clients past spending and factor that into future spending to create a realistic retirement plan.
In the age of social media, comparing ourselves with others, especially those who are well off, is common. This can increase stress and dent savings in the long run. To overcome this issue, Sarah recommends having a financial role model, one who is admired not envied and lives a desired life that is achievable.
At the forthcoming Morningstar Investment Conference scheduled to be held on September 17-18 in Mumbai, Dr. Sarah Newcomb will share practical tips on how advisers can help clients save for retirement. So do not miss this opportunity. Take a look at the agenda here.