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Questions financial professionals should ask their clients while income planning for retirement

Creating a tailored retirement income strategy for clients starts with understanding their expenses and lifestyle goals.

Once a client retires, the money they have accumulated must now be used for income. And, just as there are accumulation strategies, there are strategies for withdrawing income to fund the retirement lifestyle.

One important step is to determine the actual amount of desired income needed to maintain the desired lifestyle. The idea is to develop realistic expectations for a client’s expenses and lifestyle goals, and then match it with a realistic income strategy.

Writing a formal retirement income strategy with clients will also help them set realistic expectations for their income and expenses during retirement so they can feel more confident as they enter their golden years. So, here are questions that financial professionals should consider while creating a tailored retirement income strategy with their clients.


What are the client’s risks?

Identifying potential risks that can derail retirement security helps a financial professional develop a tailored strategy for that client. These can include spending, health care, longevity, inflation, and market volatility. All of these risks can present unique challenges to how accumulated assets will be withdrawn during retirement. Understanding a client’s exposure to risk will help identify strategies to mitigate those risks – both now and in the future.


What are the client’s expenses?

Spending habits vary widely. Developing a budget for a client’s retirement spending can be challenging. Don’t expect to predict someone’s expenses during retirement perfectly – there are too many unknowns.

Ask clients about their current expenses to begin to estimate their spending during retirement. A well-informed estimate based on a client’s responses will be better than general estimates.

When estimating retirement expenses, break down those expenses into essential, discretionary, and legacy. Separating expenses into these categories will help establish how much money a client will need to cover necessities and how much extra is needed for the client to have the lifestyle they want in retirement.

  • Essential expenses: basic ongoing bills like food, clothing, shelter, health care, and taxes.
  • Discretionary spending: items like travel, club memberships, gifts, and entertainment that aren’t considered necessary. Be careful here – the expenses you feel are discretionary, like a health club membership, may be considered essential to the client.
  • Legacy expenses: specific after-death goals like taking care of a special-needs child or a surviving spouse and charitable giving.

What are the client’s stable income sources?

All clients should plan to have more than one source of income during retirement. Many people will consider their Social Security benefits to be the foundation of their income during retirement. But Social Security alone is often not enough.

In fact, in the 2022 Retirement Risk Readiness Study, just 10% of retirees agreed that most people will get enough money from Social Security to meet their needs in retirement.

A client’s stable income may ultimately be Social Security, a pension payment, and perhaps some other stable distribution from rental property or dividends.


Will the current stable income be enough?

This is the big question. If the answer is “no,” the client has an income gap. And this is where a financial professional can help the client navigate their retirement income gap with tailored solutions. With this information, a financial professional can help create a guaranteed income stream to ensure that the client’s basic needs will always be covered. Guaranteed income can include Social Security, pensions, and financial products like annuities.  (Annuity guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company.)

While the client may have an income gap now, a financial professional can offer guidance on creating an income strategy that will help them achieve the retirement experience they desire.

To learn more about the value of income planning, download this brochure.

Annuities can help you meet your long-term retirement goals by offering tax-deferred growth potential, a death benefit during the accumulation phase, and a guaranteed stream of income at retirement.

You should carefully consider the features, benefits, limitations, risks, and fees that may be associated with an annuity, as well as the expenses, investment risks, and objectives of the underlying investment options in a variable annuity. Ask your financial professional if an annuity is appropriate for you based on your financial situation and objectives.

Withdrawals will reduce the contract value and the value of any potential protection benefits. Withdrawals taken within the contract withdrawal charge schedule will be subject to a withdrawal charge. All withdrawals are subject to ordinary income tax and, if taken prior to age 59½, may be subject to a 10% federal additional tax.

Products are issued by Allianz Life Insurance Company of North America. Registered index-linked annuities (RILAs) are distributed by its affiliate, Allianz Life Financial Services, LLC, member FINRA, 5701 Golden Hills Drive, Minneapolis, MN 55416-1297. 800.542.5427 www.allianzlife.com