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How to retire strong and live long

Do you want to retire strong and live long? Do you want to be able to rhyme that well, too? Join Karl Susman this week on the Susman Insurance Agency podcast to discuss some good way to plan to retire. Transcript to follow.

JIM: I have been looking forward again to today’s show, especially with National Senior Citizen Day, we decided we would have Kelly Ferrin (SP?). She’s been a regular guest on our program. What’s unique about Kelly, her profession is probably something you’ve never heard of before, which is gerontologist, and she has made it her focus to study longevity and the effects of people living longer and longer and the type of planning that you need to do because of it. I want to start out the program, Kelly, I know you got a golf scholarship, and you were studying gerontology in the classroom and how that was different than golf practice. Can you share that a little bit.

00:40

KELLY FERRIN: Well you know Jim, it’s a delight to always talk with you. I so enjoy your passion and your message that you are just so interested in sharing in. For me I think that that’s why we have this connection. We’re very passionate about the work that we do, and oftentimes I do work predominantly in the financial industry and I ask my audience all the time, how many of you have ever met a gerontologist before. Most of them just kind of look at me dumbfounded, a couple of hands will go up. I say, okay how many of you even know what a gerontologist is. Again, dumbfoundedness, and I said well if I show you a bottle of Geritol would that help you go in the right direction. Gerontology is a study of aging, and I say you know we are in the same line of work. Financial advisors do it from a different perspective than I do, but we have the privilege and the pleasure to help people make the right choices in their lives. Probably like many of them wondering how in the world they got to their point in their lives or their careers to be listening to a gerontologist, I too had no idea I would be a gerontologist when I grew up. Like you said I was fortunate to go to the University of Southern California on a golf scholarship and came out a gerontologist. Most people can see the connection between golf and gerontology. Certainly the fact that I competed with kids my own age, the majority of time I spent on the golf course, however, was with older adults. At a very early age subconsciously I started looking at aging in a very different way. I saw healthy, active, working, traveling, volunteering. The interesting thing was when I got into the academic side of aging, now this is the top school in the nation for the field of gerontological study, it’s a university with hundreds, if not thousands of graduates in other disciplines, there were five people in my graduating class. That’s why most people have probably never met a gerontologist before, there are not very many of us around, but when we take a look at the coming demographics in this country, obviously we can see there’s going to be a tremendous need for this. There has been really kind of a fun way of transferring this knowledge and working in the financial industry as well, but that’s pretty much how that whole thing got started, and I think that this industry is at a crossroads, the financial industry in my opinion, professionally. The new model is going to be more about longevity planning. I think that’s something that’s an exciting time because we’re starting to take a look at longevity and retirement and financial in a very different way. My industry had to change as well. I think it’s an evolutionary time. When I started in the field of aging, up until the last maybe 30 years ago, all the studies on aging were done in nursing home. All of them. Now that may be a very convenient plan to study one side of aging but it’s not the only way of looking at aging. As a society I think one of the challenges is that a lot of people have been conditioned to believe that age is time of decline. People may age because they expect to age. Which brings up some interesting challenges in the financial industry, because if you’re talking about people sacrificing for a phase of life that they don’t understand, let alone have a negative image of, it’s not going to work. We really do have to kind of engage people into a new style of financial retirement longevity planning because of bringing them current on what’s going on in the longevity sphere.

3:18

JIM: I know the big thing is people are living longer, medical technology is keeping us alive longer, and as someone who counsels people on retirement planning, they talk about what date do they want to retire, and you still have these people saying love to retire by 60 or sooner if I can, and I find myself more and more often telling people even though I’m not telling them what they want to hear, I’m telling them you really should plan on working until you are 60 or more ideally 65 and then have a transition to where maybe you slow down a little bit, but you still should be trying to earn some income instead of being completely dependent on what you’ve been able to save and social security for what might amount to longer than they did accumulating. They might be working for 30 to 35 year and then be 40 years in retirement. Is that what you’re saying?

4:07

KELLY FERRIN: Well yeah, absolutely. I think that when we talk about retirement planning versus longevity planning, the concept of retirement has changed. The word, no, but the concept yes. As a result of that we’re kind of looking at retirement in phases where people are living longer, so logically it’s likely they’re going to be working longer, but there are so many important elements that work brings to life with longevity, like engagement, looking at the life stages that we’re in. We’re in a place where we’ve never seen not only people living longer but living the way that they’re living. For example, the life stages, you know there’s no sequential order to the life stages of marriage, child, divorce, grandparent, widowhood, retirement, whatever, nor is there any rule you’re not going to revisit some of these ideas more than once. We have some very interesting trends new occurring now as a result of longevity. For example, we have this concept of the family bank, where the majority of the Americans have become the family bank, where they’re supporting adult children, nieces, nephews, siblings, aunts, uncles, I mean it’s all over the place. We have another phenomena called grey divorce, which is something we’ve never seen before, where we’ve seen a 50% increase in divorce rate after the age of 50 in the last 20 years. The good news is they’re getting remarried. The bad news is they’re getting remarried, which means they’ve added another layer of financial responsibility. What about the affect divorce has on a woman’s household income, or grandparents who certainly hope that they can contribute to the grandchildren’s college fund, little did they know they probably are the college fun. There is just all these very interesting things that are happening dynamically which is really changing the look of retirement like you started off by saying, people are going to have to change their thinking about how they look at their life and how they look at their life in retirement and how they’re preparing financially, that’ s just the way it’s going to be.

5:47

JIM: Now I’ve heard you first coin the word Financial Sherpa as opposed to being just another financial advisor or professional. Talk to our audience about what you mean by that.

5:58

KELLY FERRIN: Well I love that, and it kind of falls under the umbrella of financial gerontology. I’ve been working in the financial industry space for the last 12 years. I am a retirement specialist, longevity expert, and one of the things that we’re starting to see is this connection now between financial and retirement and financial gerontology. There really is such a concept. It’s a blending of our two industries to help better understand the financial ramifications of this longevity. I think when we talk about a financial advisor versus a financial sherpa, one of the slides that I show when I open up my talk is this 80-year-old at the top of Mount Everest with his sherpa. I said not only is this extraordinary, it wasn’t the first time but the third consecutive time this guy scaled Mount Everest. Did it at 70, 75, and again at 80. If that’s not extraordinary enough, he started his 80th year off with his fourth heart surgery, so as you said earlier, clearly the medical technology is enabling people to live very long lives. How they live these lives, how they finance these lives, how they plan these lives obviously is very different. What I share with people is that, and if it wasn’t for the gentleman on the left, the sherpa, would he have ever gotten up or down. The sherpa plays an extraordinary roll, navigating people through unchartered territory, very treacherous terrain. What I share with people now is that consumers today feel very much like they too are scaling Mount Everest as they prepare financially for this retirement and this new longevity. I ask financial advisors just to take off that hat and to look at their roll now as more of a financial sherpa, because people very much need this help in navigating their way through and preparing for it.

7:28

JIM: Now let’s bring up another challenge, and that is okay not only are people living longer, but now we see things like the social security which most people are depending on, they’re telling us there’s not enough money and changes are going to have to happen. We have low interest rates, we have a lot of people out of work, a lot of people don’t have pensions anymore because companies have done away with those and now people are dependent on themselves to save for retirement and we don’t see them saving the way they should. What do you say about that?

7:56

KELLY FERRIN: Well here again, I think the financial advisors play one of the most important roles in this country, and I think that this industry has done a phenomenal job of really enlightening people about what’s going on. There’s not one company out there that’s not got some gimmick whether it’s the number, whether it’s the line, whatever it is, but there definitely has created an awareness of the fact that people have got to start planning better for financial, for longevity and for retirement. For one of the things that I try and share with people is that when we’re talking about financial planning, we really need to understand that we live in a financially illiterate country. I just read in the USA Today, Jim, one of those statistics that they have where they said 80% of older adults feel challenged in financial preparation in retirement and for retirement, this was an American College study. Even as later in life. I think when we start understanding that, particularly in this industry, this is not the consumer and the public’s comfort zone, this is not their world. This is the financial industries world and we conversate with them in a way addressing financial issues, which I think we need to really shift that back and understand it needs to be life planning and longevity planning and how then we position products and discussions with that in mind. Because clearly this is a realty, there was a study that was done not too long ago where it said 80% expect to see their dentist on an annual basis, yet less than half, 46 will see their financial advisor, that’s if they even have one; 65% of the American public view money and finances as complex, and as a result 65% procrastinate over financial matters. Two-thirds of Americans between the age of 35 and 70 have not prepared a retirement plan. You and I know people don’t plan to fail, they fail to plan. They really don’t even know where to start. When we start looking at probably the most important part is to have effective communication and listening skills, that’s what consumers are really looking for and helping navigate them through this longevity journey. Does that answer the question?

9:51

JIM: Absolutely. We’re going to take a short break. When we come back let’s focus on what role the client should have in working with their financial professional. Please stay tuned.

10:02

[BREAK]

11:05

JIM: Welcome back as we continue to visit with Kelly Ferrin, who is a gerontologist, who is a student of the longevity issue that’s going to affect many of us Americans as we dive into retirement, especially us Baby Boomers at the rate of 10,000 a day, are we prepared. Kelly, before the break we were talking about the sherpa that you used, and I look at it while the sherpa was doing a lot of lifting, that 80-year-old gentleman still had to take the steps up the hill and then back down the hill, so there’s work involved, it’s a team effort. The people that are listening to this program they have a professional that has distributed this program to them as a way of helping to educate them, and I know I encourage all my clients to have regular meetings, regular checkups, and we don’t have the time to chase them down. It takes the effort of them responding to the phone call or a letter or an email that says it’s time to come in and actually schedule that appointment. What would you suggest that as a client what should they be proactively going to their financial professional, when should they be calling them, should they be responding to all these invitations for whether it’s seminars or come in for an Annual Review or whatever the case may be, what do you say to clients?

12:21

KELLY FERRIN: Well for me, I try and position the financial advisor team as their most important confidant. The relationship that clients have with their financial advisors is probably some of the most important and maybe even comes in a completely different perspective than that with their family. I think if they can just get over the fact that they’re probably not prepared and be straightforward and upfront with their advisors about where they really are financially, then we can start laying down the right path. I don’t think most people are willing to admit the fact that when we look at the current retirement boomer studies and their income sources, 50% are planning on social security as their primary source of income, 25% will come from traditional pension plans, 23% will come from a 401(k), 19% may be personal investments, and then 17% from an IRA. We really need to educate people and make them feel comfortable. I really do, Jim, I’ve said this from the very beginning, I don’t think it should be discussed with clients from a financial planning focus as much as it should be coming from a life planning focus. Helping people understand that longevity, where they are in the life stages where they’re headed, what maybe is coming up that we need to be looking at in preparation financially for this life journey that we’re on, that’s really where it comes down to, so it’s never just the clients need to be coming in this way or the advisors need to be talking about, it’s a partnership and that’s why we talk about the sherpa. Because each of them brings a different element to the table. When we look at today’s studies of retiree priorities of their financial advisor, the advisors are usually quite surprised when I share this information with them, that 82% of consumers say peace of mind is the goal, six times more important than accumulating wealth. Yet when they’re sitting down and having client discussions, they’re probably focusing more on the accumulation of wealth, the aggressive investing and those types of things. That’s not necessarily what the clients are looking for today. Protecting assets is actually five times more important than aggressive investing to a consumer, an 80% are looking for education and advice on saving for retirement because they’re looking for this partnership, but again how the conversations are being held I think is where we need to remember always that the financial world is not their world. It is our world and it’s our job to help them look at their life and figure out how to put the financial pieces with it. When they’re asked what the ideal financial advisor is, they talk about effective communication and listening skills far more important than returns.

14:48

JIM: I know a lot of advisors that are out there are very sharp people, they understand and they’re well-skilled in their profession. Sometimes, like you said, I heard a story a while back about the tappers and the listeners. They did a study where they had this group of tappers and they gave them a bunch of songs to tap out like Mary Had A Little Lamb, well-recognized songs, and they asked these tappers, this audience that you’re going to be tapping to how many songs do you think the audience can correctly identify, and they said probably half and would end up being is 2%, because they knew what they were tapping out but the listeners didn’t hear it, they’re trying to figure it out because they’re in their realm, and one thing as a client that I emphasize that you should take from this message is you got to be willing to speak up. I always tell people the only dumb question is one that doesn’t get asked. You’re dealing with a professional right now, but if you have to take a role, if you don’t feel that you’re getting what you need to be getting from that conversation, you maybe need to just say timeout and let them know what’s important to you, what your priorities are, because they’re skilled to help you reach that, but if you don’t speak up they’re just assuming that this is the direction you want to go.

16:04

KELLY FERRIN: But I’m not sure, Jim, that most people are comfortable doing that. Consumers don’t want to feel like they’re some schmuck and they don’t really understand the terminology or the language or the presentation that’s being made, so they just kind of nod their heads and go along. I frankly think that’s one of the reasons why we have a financial illiterate country. We certainly have great professionals as you’ve talked about who are very well-versed and educated in how to help people, but that industry also needs to take another additional step, and this industry listen has been playing with this idea of life planning for a long time. I do think that it is getting more incorporated and they understand the fact that talking with consumers needs to be different than talking with one of their financial advisor associates. You have to speak a completely different language to them. The ones who are effective at doing that are the ones that have the growth in their business and the continued referrals and the multi-generational planning abilities.

16:57

JIM: That’s absolutely, and I agree wholeheartedly, and that’s why I tell clients because at the end of the day if you’re not making sure you feel comfortable in the direction that you’re going, who is going to fix that for you? You have to take charge when it comes to these issues and making sure you’re on the right path. The other thing is that you mentioned that I just have to reiterate, sometimes it’s clients take an us and them mentality, you know I don’t know if I want to tell my advisor about this or that, I better keep this secret, and the thing is it’s just like going to your doctor. If you keep it a secret that you’ve got this lump that’s been growing for the last three months, because he might want to do surgery and he’s got kids going to college I might be paying for that, well you might have a life-threatening disease that might not be life-threatening if it’s caught soon enough. Well you talk about life planning versus retirement planning and making sure people have a quality of life that they want and expect, well if you’re not fully honest with your financial doctor you may not get the best results.

17:57

KELLY FERRIN: I agree, 100%, and that’s a great scenario to share, because it is dead on with where we have so many challenges. We are getting there, but you know it’s funny, you know I talk about the fact that as a gerontologist and a specialist in retirement, I can’t talk about successful aging, successful retirement without talking about financial planning. Nor do I think this industry can be as effective in the work that they do without really incorporating this longevity planning, life planning scenario in their conversations with products and the investments that they are recommending. They do have to step away and look at it from a different lens and that’s where we end up getting to have some pretty significant results, and like I said this industry has done a great job. There’s a lot more work to do but they definitely stepped, definitely stepped up.

18:42

JIM: Well Kelly, it’s always awesome to have you onboard. You are a wealth of information, and one thing I just got to bring up the one story that really sticks in my head is the gentleman that you had, the retired, I think it was a GM exec that retired a couple years shy of being vested in his pension because of a heart condition, thought he was going to die, he lived, and I think if I remember right he was a gold medal winner in the senior Olympics, over 90 in the hurdles or something like that, and that story will always stick with me, so the thing is we have to be prepared for our future, so if there are any parting thoughts what would you say that it would be?

19:18

KELLY FERRIN: Yeah, no I think that we do, and the reality here, Jim, is that the majority of Americans guesstimate how long they’re going to live and how much it’s going to cost them to do so. The probable with that is that they generally underestimate how long they’re going to live, so when you’re basing your finances on a low ball number that’s going to be a problem. We seem to be in a place now where we are keeping people alive sometimes longer than they want to be, and we’ve got to start recognizing that this longevity planning is here. I think at the same time too we are experiencing perhaps one of the most extraordinary revolutionary events ever where we’re seeing this mass longevity. People are living not only longer but they’re living healthier lives. This idea of retirement has changed dramatically. It is no longer and nor has it been for years in the front porch and tiddlywinks, this is just a whole new life phase and stage and it can be what we make it to be. I can introduce you to 80-year-olds who act and look like their 50, and 50-year-olds who act and look like they’re 80. When people often ask me, when they hear I’m a gerontologist and I specialize in longevity, what would be the number one thing. The number one thing I tell people all the time is attitude. Feeling good about yourself, feeling good about your life. When we can get people to think differently about their life and their longevity, then they’re much more likely to incorporate the lifestyle behaviors that will enable that to happen. If they think it’s an automatic to decline, they’ve got no control over it, they give it up, they go to the barker-lounger and they blame all their problems on age. We are in a very new place and it’s an exciting time to be living long. But there are some tremendous challenges that go with it and the preparation financially, physically, mentally, socially that’s all going to be a part of this. We need to look into longevity planning and life planning as part of the umbrella of financial planning, and I think that’s why this financial gerontology is such an exciting time for this industry.

20:56

JIM: I’m going to quote the boy scouts to finish it, “Be Prepared.”

21:00

KELLY FERRIN: Be Prepared, that’s good, that’s right, or as Spock says, “Live long and prosper.”

21:05

JIM: Absolutely. Well it’s always a pleasure, Kelly; I really appreciate it and look forward to having you on again soon sometime.

21:13

KELLY FERRIN: Right back at you Jim. We’ll look forward to that, Jim. Thank you so much and thank you so much for the work that you do, it’s fabulous.

21:17

JIM: Have a good one.

21:18

KELLY FERRIN: Alright, take care, bye.

21:19

JIM: Bye.

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