Retirement Planning and the 80% Rule. Beware!
I have been engaged in the financial services industry my entire adult life. Retirement plans have transitioned from defined benefit to defined contribution plans, leaving a majority of pre-retirees in the very uncomfortable position of having insufficient resources to last throughout retirement. Surprisingly, many financial advisors continue to recommend the 80% rule to their clients and prospects. Sadly, the reality is that many, perhaps most, may never acquire sufficient investment assets to replace 80% of their pre-retirement income.
Financial advisors must help clients adapt to their changing circumstances and balance the reality of retirement income versus expenses. The good news is that Gen-Xers and millennials appear to be better at saving for retirement than their parents and grandparents. Financial advisors remain one of the greatest catalysts for good, especially when they balance needs with wants in the lives of their clients.