Don’t let clients punt on retirement readiness

Tom Foster

By Tom Foster
E. Thomas Foster Jr. is head of strategic relationships for retirement plans for MassMutual.
Posted on Oct 17, 2018

Retirement comes earlier for some people, much earlier if they work as a professional athlete.

For example, the average career of a professional football player lasts 3.3 years, according to Statistica .1 For the most successful players – those who are selected to at least one Pro Bowl – the tenure jumps to 11.7 years.

Baseball players who put in 10 years can start receiving six-figure pension benefits in their 50s, according to the Society of Actuaries .2

Unlike professional athletes, few people retire in their early to mid 30s or even earlier. Most of us need decades of earning a paycheck and saving in an employer’s 401(k) or other retirement savings plan before we can hang up our cleats. Most working Americans anticipate working until they are at least age 66, the Gallup poll reports .3 It’s a sensible age approximating when most people qualify for full retirement benefits from Social Security.

However, the reality is that many people retire sooner than they expect, a fact that financial advisors may want to share with their clients and retirement plan participants. While retirement savers often plan on a specific age or date, unexpected circumstances can intervene.

The average reported retirement age for Americans who are currently retired is 61, according to Gallup. The Center for Retirement Research at Boston College finds that health issues are the No. 1 reason why workers retire earlier than planned.4

Advisors can help clients and plan participants prepare for unforeseen events that might prompt an early retirement. Preparation starts by conducting a “gap analysis” for clients and plan participants as well as connecting them to tools that can help them check and adjust their retirement readiness. There is a real danger for people retiring before they are financially ready – whether they want to or not – and knowing where you stand can make a difference.

The intent of creating a gap analysis is to document a pre-retiree’s spending habits and project what lifestyle he or she envisions in retirement. Some issues to address are once retired, will the client continue paying a mortgage, rent or condo fees? What are projected for medical expenses, taxes and insurance? Don’t forget lifestyle considerations such as travel, hobbies and charitable giving, support for adult children, grandchildren or other relatives, and other individual spending choices.

On the income side of the ledger, will the client have a pension, cash balance plan, annuity or other guaranteed income? How much can be expected from Social Security and, of course, retirement savings. Any difference (shortfall) between their income and projected expenses constitutes a “gap” that needs to be addressed to project properly for future retirement readiness.

Many retirement plan providers offer web-based and even mobile-based tools to determine and track retirement readiness. MassMutual, for instance, offers the RetireSMARTSM Ready mobile app for smartphones to give savers in 401(k)s and other defined contribution retirement plans immediate access to information about the progress they have made towards their retirement goals. App users can then adjust their strategy to better help them meet their goals. The app is a mobile version of MassMutual’s RetireSMART Ready tool, which provides a snapshot of a saver’s retirement readiness at a specific age based on the information provided by the user.

Both the app and tool generate a personal projection of monthly income in dollars or, if preferred, show the progress towards a stated financial wellness goal in retirement as a percentage of pre-retirement income. In order to generate the most accurate projections possible, savers can include information about other retirement plans they may have, such as IRAs or 401(k)s from previous employers, as part of income or retirement readiness calculations. The projection is made in the form of an easily understood mountain chart.

Advisors may suggest that retirement savers calculate retirement readiness for different ages. If the saver is thinking of retiring at say, 66, then he or she should conduct the analysis for that age as well as a few years earlier. Because so many retirees say they packed it in at age 61, it may be advisable to consider that age as well.

If the person would have an income shortfall if he or she retired at an earlier age, then discuss what changes might be made to address this issue if the unexpected happens. Could he or she curtail their lifestyle? Would a part-time job in retirement make sense for a while to hold off taking Social Security and therefore increase the benefit? Perhaps saving more now while the person is still working would be a good hedge.

While most people experience careers that last decades longer than a professional athlete’s, no one can predict if an early retirement may be in the offing. Thinking through such a scenario can help retirement savers plan for the worst while hoping for the best. And avoid punting on early retirement plans.

E. Thomas Foster Jr. is head of strategic relationships for retirement plans for MassMutual.


1, “Average Playing Career in the National Football League.”

2 Society of Actuaries, “MarketWatch: Big Papi and other retired baseball players can get a $210,000-a-year pension ,” Oct. 15, 2016.

3 Gallup Survey, “Snapshot: Average American Predicts Retirement Age of 66,” May 10, 2018.

4, “What is forcing workers to retire earlier than they planned?,” Dec. 4, 2015.