Welcome to Talking T&E for Advisors, where Trust & Estate Editor in Chief Susan Lipp and Jamie Hopkins, Chief Wealth Officer of Bryn Mawr Trust, take seemingly complex estate planning issues and break them down for financial advisors.
In this video, they discuss Jamie’s new book, Your Retirement SketchbookAnd how advisors can effectively help clients plan for retirement.
-
What inspired you to write this book on retirement?
-
How do you help clients with “involuntary retirement”?
-
What are some tax issues involved when considering retirement?
-
What are some common consumer misconceptions about retirement?
Read the full raw transcript below:
Susan Lipp: Hello, I’m Susan Lipp. I’m the editor-in-chief of Trusts & Estates, and I’m talking to Jamie Hopkins, CEO of Bryn Mawr Trust Advisors and chief wealth officer of Bryn Mawr Trust, and now author of a new book on retirement issues called Your Retirement Sketchbook, which has 125 retirement planning lessons. So we’ll discuss some retirement tips that you can share with your clients. I know I was very interested when Jamie gave me the book you know, it was something my husband and I were discussing, and we were very excited when we saw the title and all the useful information. So, let’s start with Jamie.
What was your inspiration for writing the book?
Jamie Hopkins: Well, I like to start with the story of you and your husband watching it because, you know, that’s part of it, right? I want it to be a helpful tool for people and guidance and something that feels less scary and a little more fun. I think you said that as you saw the sketchbook thing and the drawings, you’re saying, oh, we might really like to look at this, and really the goal is to create something more fun in our area. Too many retirement plans are based on spreadsheets and Monte Carlo analysis rather than the way people want to live their lives.
The second part is the power of visualization. I’ve been using visualization for years. I’m a whiteboard and, you know, drawer by nature. If there’s a whiteboard in the room, I’ll draw on it. I’ve always done this with clients and when I teach. And so I want to put that in the book and challenge advisors to explore ways to bring visualization into their practices. So there are really 3 strong research-supported findings around visualization. So one is the use of visual metaphors.
I talk about our area a lot, we really only have two that I’ve heard of, buckets for running and mountains for retirement. You go up in terms of savings on one side and come down in terms of spending on the other, but these are very helpful. But when you’re explaining complex topics, think about other topics you can use in your practice.
The second thing is don’t be afraid to draw things out in front of customers. If it’s messy and bad, it’s really good. So the research shows that dirty drawings, when you had, we used to call them pencil sales, where you draw on paper and move it and someone else writes something on it, when it looks incomplete you invite collaboration. And so then they, as the customer, participate in this journey of filling out what appears to be a sketch.
And then the last one is called visual variation, and that’s drawing multiple iterations of the same thing to show progression. And people don’t really understand concepts until we look at it in many different ways. You probably know that when you learn and study things, you have to look at it from multiple angles. So don’t think that you just need to draw a picture, draw a few things, show it changing, and it brings people into conversation.
Susan Lipp: All right. Well, one thing I noticed in the book was that it had a section on involuntary retirement. That was kind of a scary segment, but can you talk a little bit about that?
Jamie Hopkins: Involuntary retirement is a reality for millions of Americans. Their jobs may be cut, their health may deteriorate, you know, they may have to come back into the boomerang world of having kids or even taking care of parents, and they may be taken out of the workforce, not because they want to, but because they have to.
And if you look at some statistics related to retirement planning, you’ll see that about 45% of people actually retire when they plan to. About 45% of people retire earlier than they expect, and only about 10% work longer than they expect.
So it’s just as likely that you’ll retire earlier than you plan, as it is that you actually retire when you plan. So, I always tell people, you need a plan for early retirement, whether you choose to do it or you’re driven by some external factor. So, plan about it, know what retirement will be like if I don’t have work for the last 3 to 5 years? How do I make the cut? How do I spend? What does life look like? But planning for that contingency in advance puts you in a better position if it happens.
Susan Lipp: Are there any tax savings issues involved when you’re thinking about retirement?
Jamie Hopkins: Yeah, I mean, for advisors, we know a lot of these things and usually the question is how do we deliver them equally to all of our clients. So when we think about Roth conversions, you know, 529 accounts, we actually talked about briefly there as well, and how they play a role if you give them more money. And, you know, now you have the ability to roll into the Roth a little bit, but the HSA, I’m a big fan of that. I’ve been a proponent of using HSAs for the triple tax benefit of tax-deductible, tax-deferred gross, tax-free savings, but then looking at the asset side, you know, where should these assets be? In previous videos, we’ve talked about potentially leveraging trusts to transfer assets to your children to minimize taxes, but taxes, your home, and health care are your three biggest retirement expenses.
So understand how Social Security is taxed, right? Understand how the Medicare surcharge is applied and what people are often surprised by. And then in retirement there are other things to do to manage your tax bracket from year to year, and that’s a huge value in my opinion about advisors. I really believe that, you know, the biggest area of value we add outside of the transactional side is effective tax management for clients.
Susan Lipp: Another part of the book that I found really interesting was your advice right before retirement, like spend a little more money, you know, not worry so much about saving and actually maybe work a little bit longer because it can add up to, you know, you’re saving a lot for retirement. And I think that’s something that most people don’t realize, so I thought maybe you could explain that and if there are other misconceptions that people have about what they should do around retirement.
Jamie Hopkins: Yes, I think, Susan, what probably shocks people the most when I talk about this is when I say spend more, give yourself permission to spend, take two years off before retirement, go away, and if you can start telling yourself that it’s OK to spend closer to retirement, then what you actually see is that people can stay in the workforce longer.
And if you wait 6 more months, it’s actually beneficial to stop saving for retirement 3 years earlier. Now, it depends on how you model it, but just think about it. Saving $10,000 or $20,000 for three years doesn’t make a big impact. But if you can work six months more, or, you know, work a whole year more and you’re making $120,000 then you can again make a living on that. You do not have to take distributions from your portfolio. You don’t have to claim Social Security first. And by rolling that out a year, it actually equates to a savings of about 1% for 30 years ago. It’s kind of like, there’s research out there that talks about this and the delay and how big of an impact it has. And so it’s often the case for people, the biggest thing they can do to improve their retirement security is really just to work a little longer.
And I am not saying work for another decade, but think about 6 months in a year. If I take nice vacations, buy a nice car, can I feel that incentive to keep working? And I have a friend. They saw me presenting this, I think 2018 now. He was getting ready to retire in 2019. He took this advice. He now takes his family on a luxurious trip every year and is used to it. He stopped saving for retirement and he’s still working. He told me he was going to retire this year, but he made it about 6 to 7 years longer, and he liked it because he was like, I was scared of it, I didn’t want to pay for all my kids and grandkids to go on this trip, but then when I was working, I took that 20,000, 250, and I used it for a trip. And this encouraged me to keep working. And so, you know, it works, people do it, and I love that it’s a tip.
Susan Lipp: Yeah, I know, I like the idea too, especially the part about you know, spending money and going on vacations because it’s something I’m always telling my husband, you know, we should do it as long as we can to travel, and all that. So, but I think that sounds like really good advice. And again, thank you for sending me the book. It was really very helpful and it has a lot of good tips, if any, you know, for clients who are considering retirement.
Jamie Hopkins: Yeah, okay, thanks and thanks for talking about it today. And if you’re a consultant or anyone else, I think one of my big challenges is figuring out how to bring visualization into your work, right? Better customer engagement, better storytelling, better understanding. Whenever we can tell a story with pictures, it’s better.
Susan Lipp: Okay, thanks very much, Jamie.