Retirement and estate planning: Three discussions to have with clients now

Putnam Investments, 07/20/20


The COVID-19 pandemic has likely made retirement and estate planning a top-of-mind issue for your clients. Market swings, job losses, and health concerns have no doubt contributed to anxiety about retirement security. Whether clients have decades of work ahead, are quickly approaching retirement age, or are now living on retirement savings, no one enjoys instability, especially when it comes to something as important as retirement.

Several months into the pandemic, now is an ideal time to discuss retirement and estate planning with clients.

Here are three conversations worth having now — and tips for using FundVisualizer to support these conversations.

Do retirement account provisions of the CARES Act apply to you?

The CARES Act, passed in March, made several important changes in the rules governing tax-advantaged retirement accounts that could be useful.

For clients who are experiencing financial hardships related to the pandemic, the CARES Act provides a few options. First, it doubles the amount investors can take as a 401(k) loan. Second, it allows some account holders to take early hardship withdrawals of up to $100,000 from 401(k)s and IRAs, waiving the 10% penalty tax on most withdrawals from these accounts made before the owner turns 59½.

For clients with who are already retired or have inherited an IRA, the CARES Act provides a waiver of required minimum distributions (RMDs) for 2020 from some retirement plans. Under a recent update from the IRS (Notice 2020-15), investors who have already taken a distribution in 2020 from a 401(k), a 403(b), or an IRA account can roll those funds back into their account by August 31, 2020. Clients who have taken their 2020 RMD may not be aware of this opportunity to reinvest.

FundVisualizer’s portfolio modeling tool enables you to make adjustments to client’s portfolios that may be necessitated by changes in a client’s circumstances. You can then see how those adjustments might affect portfolio performance.

To compare historical returns of different portfolios and their allocations across various market environments, use the portfolio modeling feature. Click “Edit” to select funds, select two or more funds, ETFs, or indexes, select "Portfolios," and click "Create".

What does your path to retirement look like now?

This is the question on every client’s mind at the moment. A check-in on employment and health status, a discussion about how their time to retirement may have changed, plus a review of the current state of their investments can be a welcome reality check to concerned investors.

This is also an ideal time to review retirement portfolio allocations in light of the pandemic. It could be time to add bonds or cash to the portfolio, or consider investments in companies or industries that have not been negatively affected by COVID-19.

FundVisualizer can help you examine asset allocations. Use FundVisualizer’s Asset allocation chart to see how assets are allocated across equities and bonds, cash, and other. This can help you identify where changes may be needed. View the Asset Allocation chart now. Click “Edit” to add funds, ETFs, or indexes.

To see how adjustments to a portfolio might affect performance, use FundVisualizer’s portfolio modeling tool to compare existing and adjusted portfolios with a benchmark. To use the portfolio modeling tool. Click “Edit” to select funds, select two or more funds, ETFs, or indexes, select "Portfolios," and click "Create".

Do you have an up-to-date will and estate plan?

The sudden and dramatic appearance of COVID-19 has been a reminder that every adult should have a will, healthcare durable power of attorney, and estate plan in place. But the fact remains that a majority of American adults have neither a will nor an estate plan. A discussion about retirement savings is a good time to address the importance of having an estate plan and introduce financial planning considerations. These include:
  • How have clients provided financially for the care of young children?
  • What is their plan for adult children?
  • Have they considered the tax implications of their investments?
  • Have they created or are they considered creating a trust?
  • Have they considered naming you as the preferred advisor for their trust upon their incapacitation or death?
To explore more features of FundVisualizer, visit our resource library. To begin using FundVisualizer, click here.

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