One of my early mistake as a financial advisor is to assume that all people I talk to see retirement planning as an important goal, that retirement is a critical stage in their life that needs much care and preparation to make it worthwhile
I am totally wrong!
Statistically, out of ten people I approached offering help on their retirement planning,
10 said they are not interested! why is this so?
To most people, retirement is something that will happen many years into the future, to them while it is inevitable, it remains vague and creates no urgency to act immediately
As long term investment success is a function on how long we stay invested, the earlier we start, the higher would be our chance for success, but how do we create that sense of urgency?
MAKE IT REAL!
Help them visualize and measure.
Visualize - what is their expectation of a good retirement? what will they do? where will they live? do they have plans to travel? maybe some charitable work?
Measure - How much would all of these costs?
Starting with basic living expenses, here is a sample table projecting current expenses to their retirement date twenty years from now imputing the effects of inflation
As the 10.62M is future value (amount of money we need in the future), we discount it to present value (amount of money we need to invest today)
So the question now is not whether they should start sooner or not, but how they would want to build up the 2.2M
If a client can afford to give 2.2M - single pay VUL - employ asset allocation
If a client prefers to amortize the cost (through installment) - offer regular pay products
All the best my friends!
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