Retirement planning conversations between advisors and clients can be more effective when you have a guide that closely examines the most significant issues impacting retirement.
J.P. Morgan Asset Management recently released its 2021 Guide to Retirement, which analyzes five key issues, including current challenges and opportunities and the tools needed to support planning conversations.
“The pandemic-impacted 2020 has caused many individuals to reflect on their retirement goals, so it’s more critical than ever for advisors to understand and act upon the complex issues that will drive or derail retirement planning objectives in the year ahead,” said Katherine Roy, Chief Retirement Strategist, J.P. Morgan Asset Management. “Our 2021 Guide to Retirement considers a number of timely themes impacting those planning for retirement, such as managing lower expected returns for those closer to retirement, the importance of diversified investing, and tax management strategies.”
Updated annually, the Guide to Retirement provides an effective framework for supporting advisor retirement planning conversations with clients. It includes charts and graphs to help explain complex topics in a clear and concise manner. A description and audio commentary are available for every slide.
Here is an overview of five key retirement themes featured in the 2021 Guide to Retirement:
1. Managing lower expected returns for those closer to retirement
- The pre-retirement rate of return assumption has been lowered to 5.75% from 6%.
- Households closest to retirement who are most reliant on their retirement savings need to carefully navigate their final savings years.
2. How to diversify investments to and through retirement
- With cash paying nothing, investing is key to long term retirement success.
- More diversified investing within both equities and fixed income results in better outcomes.
3. Making the most of record savings in 2020
- While fiscal stimulus was a driver, reduced spending also played a key role in 2020.
- Opportunities to identify costs that people didn’t miss, to spend less to save more.
4. Tax planning not just for today, but for the future
- Income taxes will rise in 2026 when the Tax Cuts and Jobs Act sunsets.
- Careful planning with Roth options and Health Savings Accounts to achieve healthy income tax diversification should be a priority.
5. The ‘New Retirement’ – sooner than planned?
- The effects of the pandemic may lead to changes in retirement timing.
- Making informed Social Security claiming decisions remains a priority.
J.P. Morgan Asset Management, with assets under management of $2.3 trillion (as of December 31, 2020), is a global leader in investment management, and serves millions of DC plan participants. The firm offers industry-leading insights such as the Guide to Retirement, Guide to the Markets, Long-Term Capital Market Assumptions and spending and saving research in collaboration with the Employee Benefit Research Institute (EBRI).
To view the full 2021 Guide to Retirement, click here.