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FAs Urged to Tell Older Clients to Work Longer, Younger Clients to Invest More

By Miriam Rozen October 13, 2020

FAs should tell older clients to expect to work longer and younger clients to invest more in growth assets, according to an executive at Wells Fargo Investment Institute and longevity researchers.

Retiring in their early 60s has become an unsustainable model for many people, Tracie McMillion, the institute’s head of global allocation strategy, said last week.

McMillion also said that the retirement investment strategies of most younger clients and prospects are "too conservative."

She made the remarks during a webcast entitled: "Navigating Uncertainty: The 30+ Year Retirement," sponsored by Wells Fargo in collaboration with Stanford University’s Center on Longevity. 

Prior to the webcast, Wells Fargo and Stanford University published a report, entitled “Planning for the 30+ Year Retirement,” that states retirements that last more than 30 years “will soon be routine, if they are not already now” because of “the confluence of longer life and stagnant retirement age.”

Less than half of millennials recently surveyed by her Wells Fargo believed the stock market was a good place to invest their retirement savings, McMillion said. But millennials should invest more in growth assets, or else they will not have enough retirement income to cover health expenses in their 80s, which now cost $35,000 a year on average, she said.

Working longer may not always sound fun, but there are benefits to doing so that are not just financial, Chris Farrell, author of the recent book “Purpose and a Paycheck: Finding Meaning, Money and Happiness in the Second Half of Life," said during the same webcast.

There are “lots of reasons why a really long retirement is not desirable,” and staying in the workplace is preferable, he said. “The workplace is a community, you know, people care. When you show up, there’s gossip; there’s people you like, people you don’t like. Everybody, at their core, wants to be useful,” he added.

Despite all the death and disruption it has caused, the Covid-19 pandemic may have one “silver lining:” it has prompted more people to think about estate planning, Teresa Ghilarducci said during the webcast. Ghilarducci is a professor of economic policy analysis at The New School for Social Research, where she also serves as director of the Schwartz Center for Economic Policy Analysis.

“This is a great time to have frank conversations,” she said.

The webcast’s biggest takeaway? Many people should expect to keep working until “the end of their lives,” McMillion said.

“It wouldn’t surprise me at all if in the next 20 to 30 years, many people never retire. We’re already seeing that,” she said.

Wells Fargo Investment Institute is an RIA subsidiary of Wells Fargo Bank and serves clients of the company’s affiliate wealth and asset management businesses, including Wells Fargo Advisors, Private Wealth Management and Wells Fargo Asset Management.

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