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Exclusive Interview: Kiplinger Retirement Report Editor Rachel Sheedy Reveals the One Retirement Question People aren’t Considering But Should

Exclusive Interview: Kiplinger Retirement Report Editor Rachel Sheedy Reveals the One Retirement Question People aren’t Considering But Should
June 19
00:03 2018

Before one can advise investors, it’s critical one know what they’re thinking and understand why they’re thinking it. Mass market publications often offer a window into the minds of investors. Journalists associated with the publications, over time, develop a sixth sense for what motivates their readers. For that reason, reached out to one of the most popular – and most sophisticated – publications and tapped into one of its editors for insights on just what makes her audience tick when it comes to retirement.

Rachel Sheedy is editor of Kiplinger’s Retirement Report, the monthly publication for affluent subscribers planning for and living financially secure lives in retirement. Covering retirement for a dozen years, she has written extensively on Social Security claiming strategies, rules and strategies for IRAs and Roth IRAs, reverse mortgages, and state taxes on retirees.

FN: Rachel, tell us a little bit about yourself. What got you interested in writing about retirement issues? Was there a “a-ha!” moment?
Sheedy: I’m the daughter of a longtime Kiplinger’s subscriber, and personal finance was a common topic in our household when I was growing up. For instance, my parents always stressed the importance of saving for the long term, taking advantage of the tax benefits for contributing to retirement accounts and making sure to get the company match in a 401k. Retirement was already a familiar topic for me when the opportunity to join Retirement Report came my way, though, of course, I’ve since learned so much more.

FN: Your audience is primarily the mass market of everyday folks just looking for an edge when it comes to retiring in comfort. What is the top question they have and why do you think it’s foremost in their minds?
Sheedy: How best to claim Social Security has long been a hot topic for us. There are a lot of complex rules that people about to claim have to wrap their brains around, and people have to filter their own situation into those rules to see what claiming strategy works best for them. Those benefits are a critical part of most people’s retirement income plans, and our readers want to make smart decisions about how to maximize that income stream.

FN: Keeping on this theme, what is the most important question your audience isn’t asking but should? Why is it important and why are your readers not asking it?
Sheedy: “What will my life look like beyond the day I retire?” is a question I think a lot of our readers ask themselves, but it is a question I think a lot of people in general aren’t considering. Much of the path toward retirement is focused on reaching the retirement date, but many people could actually be in retirement for twenty to thirty years. How do you want to spend that time? What will your days look like? And do you have enough money saved and/or enough income streams to fulfill those goals? This also taps into the emotional side of retirement that people need to prepare themselves for, which can be just as important as the financial side.

FN: Turning to our readers, who are primarily professionals and regulators, do you have a sense for what your audience feels about financial professionals? Why do they feel that way?
Sheedy: In conversations with readers over the years, certainly there are many who consult a financial professional either on an ongoing basis or from time to time. I think many of them feel it’s worth the time or money to do so, though we certainly have do-it-yourselfers in our readership, too. From our perspective, we try to provide resources and guidance on what questions to ask when hiring a financial professional and how to check an adviser’s background.

FN: Same thing about regulators – what’s your audience’s impression of them? Whom is your audience inclined to trust more – industry professionals or government regulators?
Sheedy: I’m sure you could find various opinions from our readers on both groups, but I think it’s fair to say that having protections in place is important to investors who have been saving for decades and need those savings to last the rest of their lives.

FN: How well do you think your audience understands the importance of working with a fiduciary? What ways would you suggest the industry or regulators undertake to help the retail market better understand the advantages of working with a fiduciary?
Sheedy: We have written about fiduciaries and the Department of Labor’s fiduciary rule regularly, and I think our audience has a pretty good understanding of what working with a fiduciary means for them. In general, I think it’s important for investors to learn what questions to ask of the advisers they are working with so as to understand if that adviser is serving the investor as a fiduciary or not. There’s a lot of confusion for consumers with a variety of titles and designations floating around, and consumers need to make sure they and their advisers are on the same page in terms of whose interests are first.

FN: Last week Merrill Lynch decided to reconsider the fiduciary requirement for brokers working with IRA clients. This may be the result of the 5th Circuit’s vacating of the DOL Fiduciary Rule. From what you’ve seen within your readership, do you feel the importance of working with a fiduciary adviser will remain preeminent or will the typical retail investor place a greater value on the relationship established with the broker? Since you’ve earlier said it’s important for investors to know “their advisers are on the same page in terms of whose interests are first,” with no Fiduciary Rule, what do you think is the best mechanism to insure this?

Sheedy: Investors will need to reevaluate what’s important to them and what they want out of the relationship with their adviser, particularly if they were expecting a fiduciary relationship. Time will tell whether all the discussion and coverage around the fiduciary rule in recent years has made an impact on the standards that investors expect from their advisers, even in the rule’s absence. The proposed SEC rule may help protect investors, or perhaps some other future rule will be proposed. The U.S. retirement system puts a lot of responsibility on the individual, though, and investors need to educate themselves on their options when shopping for an adviser to help sort out what it is they want from an adviser. And investors need to ask hard questions when hiring an adviser. It’s critical for the investor to understand how the adviser will be paid, for instance, and how the adviser makes recommendations. And if having a fiduciary relationship is important to the investor, find out upfront if the adviser will serve that role, and if not, keep looking.

FN: What’s the most common reason you’ve seen as to why people don’t save for retirement? How can this reluctance to consider the future be overcome?
Sheedy: Some people may be stretched for cash, and in that case, a good idea is just to start setting aside a minuscule amount to get into the habit of saving. Consider saving for retirement as paying yourself first. Time can be even more powerful than the amount you squirrel away – given plenty of time to grow, even a small amount can turn into a large nest egg. Others may mean to get around to signing up for a company retirement plan but don’t follow through. Auto enrollment, where an employee has to opt out of a retirement plan, can help overcome that hurdle.

FN: Do you think retirement savers have finally shifted their focus from investing to saving? Will it last? What are the dangers to retirement savers who pay too much attention to investments?
Sheedy: Retirement savers need to be focused on both. Saving is certainly key to building a nest egg, but investing is a critical component to building a nest egg that can last a lifetime. Creating a diversified portfolio can help the investor ride the highs and lows of the market. While that portfolio should be regularly reviewed, perhaps once a quarter or once or twice a year, getting caught up in the day to day moves in the market could lead an investor to lose sight of long-term goals and to get caught up in the emotion of the market’s highs and lows.

FN: Finally, what do you see as the primary advantages of having children save through an IRA and what do you think can be done to encourage more parents to help their children establish a Child IRA? [Ed. Note: You can read more about it here:]
Sheedy: The younger you are when you start saving, the more you benefit from the power of compounding. If you have the means to contribute to any kind of savings account for a young child or grandchild, putting away even a small amount for that youngster now can pay off in spades by the time the child is of retirement age. If a child is earning income, we have often recommended contributing that amount of earned income up to the annual limit into a child’s or grandchild’s Roth IRA. Not only will the child have time on her side, but she will be creating a tax-free pot of retirement income.

FN: Rachel, thank you very much for sharing some of what you’ve seen among your readers. It’s extremely critical financial service professionals not only know the right things to do, but also to understand the best way to articulate those recommendations to their clients. Having familiarity with what the readers of Kiplinger might be seeking certainly helps boost this understanding.

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Christopher Carosa, CTFA

Christopher Carosa, CTFA

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