Retirement Planning in the Age of COVID

With the pandemic adding new challenges to Canadians’ retirement plans, Rhonda Latreille, founder and CEO of Age-Friendly^® Business, sees it as a golden opportunity for Advisors to tackle the conversation in a new light.

Volume turns up on retirement planning

Retirement planning has been thrust into the spotlight more than ever in the age of COVID. From dipping into savings to shifting priorities and changing attitudes towards long-term care, the issue is front and centre on investors’ minds, and has provided financial Advisors with a tremendous opportunity to open up conversations that weren’t easy to broach in the past. In fact, according to a recent study, 40% of Canadians worry about the effect of the pandemic on their retirement plans¹, while 70% of those over the age of 65 reported that the virus has changed their opinion on whether they would choose to live in a nursing or retirement home.²

More and more, these planning discussions about mortality and leaving a legacy have gone from theory to reality. Clients actually want to have these conversations now, and are starting to revisit what their challenges will be going forward and how it will have an impact on where and how they live – and what they leave behind.

For Advisors, now is the time to take a leadership role in helping clients define their new normal, and strengthen relationships. How is your life different now? What does this mean for the future? Importantly, it’s about recognizing that everyone wants to know they will be safe, connected and comfortable in their later years – and that these seemingly straightforward concepts have suddenly taken on a whole new meaning.

How to frame the conversation

The pandemic has offered clients a peek into the future – to see what it’s like to live without the typical trappings of structure and predictability, or connection around the water cooler. How does this inform what they will need moving forward? What is it about their life right now that gives them meaning and purpose? Often people have a romanticized vision of retirement as a 30-year vacation. Do they want to travel less now given all the restrictions? As a starting point for Advisors, it’s important to understand that the objective of the retirement plan is facilitating a life of dignity – not only financial security.

Once you have clients thinking about their life goals, then you can steer the conversation to what will likely have to change if they should need help to take care of themselves. Assisted living and long-term care (LTC) have entered our consciousness like never before with COVID, given the millions of elderly people in retirement homes who have lost the ability to have the level of connection they want – and the unprecedented toll the virus has taken on this population. It’s so important to first address these concerns emotionally, and then discuss the financial implications of certain decisions at each life stage.

We’ve heard firsthand from our members at the Age-Friendly Business ® Alliance that there is increasingly more demand to age in place, and with that comes a whole set of considerations you can present when helping clients strategize. For example, consider saying: Let’s brainstorm for a moment. If you’re living at home alone, and you break your foot, what will you do? Other potential thought starters include: Can you easily get to the doctor, drugstore and grocery store from your home? Do you have family nearby? What are the implications of informal caregiving, and what resources are available to cover these costs (particularly for those who don’t qualify for LTC insurance)? When planning, it’s about recognizing – and striking – a delicate balance between the somewhat competing goals of safety and independence.

You don’t have to be an expert

COVID has led many to question their previous assumptions on retirement, so be prepared to hear fear and uncertainty. Many clients may now be facing forced retirement, so it’s crucial to help them assess when they’re ready – not in a state of shock or grief. Above all, you want to create a secure place for them to explore these issues, and to guide them forward through a comprehensive plan. What do we need to build in that we hadn’t even considered before?

It doesn’t mean Advisors need to have all the answers, but it’s necessary to honour – and acknowledge – the upheaval. You’re in the unique position to make clients feel in control over the major decisions impacting their lives by discussing their needs, values and concerns.

Part of this means familiarizing yourself with the different levels of care options, available home safety products, tax credits, and various subsidies throughout Canada for both assisted living and LTC, which vary by province. In the Certified Professional Consultant on Aging (CPCA) designation, we have a section dedicated to these nuances, and how Advisors can access this information for their clients. In Ontario for example, the government recently unveiled a Seniors’ Home Safety tax credit that provides seniors and their families up to $2,500 when they spend up to $10,000 on renovations to make their homes safer and more accessible.

In addition, bringing in experts – from life stage managers and senior advocates to estate and LTC insurance specialists – can also make the process more seamless and the dialogue more robust, particularly when it comes to ensuring wills and POA documents are current. One of our member Advisors specializing in estate planning recently teamed up with a local funeral home, providing value-add services while building his business. The bottom line is to have enough awareness and insight to open up the conversation and encourage clients to start planning for the long term.

The tool isn’t the objective

Ultimately, money is just half of the equation in retirement planning. At the end of the day, Advisors are able to help clients live meaningful, full lives. When you realize that, picking up the phone or setting up a Zoom or Teams call to proactively broach the issue becomes an easier conversation. Perhaps never more so than now.

To gain more valuable insights, practice management ideas and business-building tools, contact your BMO Global Asset Management Regional Sales Representative.