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Modern retirement: Hope for the best, but plan for the worst — Advisers say clients’ doubts about entitlement programs should spur careful planning

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Bill Munn, private wealth advisor, Munn & Associates.
Bill Munn, private wealth advisor, Munn & Associates. - ()

He’s not an anesthesiologist, but Bill Munn said people tend to leave his office feeling numb these days.

Munn is a private wealth adviser at Munn & Associates in Paramus, where he tries to keep clients apprised of current events as they unfold at a head-spinning rate.

Often, they don’t know what to make of all the latest occurrences in politics or the economy, he said. But they know it’s exhausting.

“And I’m finding that peoples’ expectations are simply much lower than they used to be,” he added. “That’s no doubt, partially due to a lot of them still being affected by the financial crisis, believe it or not.”

There’s a tendency to be optimistic in regard to some affairs that could affect a client’s wealth, and completely pessimistic in other areas. And in no area are expectations lower than the future of America’s biggest entitlement programs for retirees: Social Security and Medicare.

“Most people in their 50s and 60s are relatively confident they’re going to get those benefits,” Munn said. “But I had a case design meeting with some advisers in the office, one being 42 and the other in his 30s, who said they’re certain as anything that they’re going to not have any of those benefits.

“And for millennials, especially, I could see why they have that skepticism.”

Then again, Munn has heard it all before.

“I’ve been in this business 25 years, (and) I feel like I’ve been hearing talk about this for that long,” he said. “So far, it hasn’t been touched too drastically.”

As Munn calls it, baby boomers — who are approaching retirement en masse — have constituted a significant lobbying force, resulting in certain programs appearing sacrosanct and politically untouchable.

He doubts that will continue to be the case for subsequent generations.

Joan Antoniello, principal at Mazars Wealth Advisors LLC, said that, in her interactions with younger people, the takeaway is that one should accrue wealth ahead of retirement as if no safety net will exist at all.

“I think it’s good to hope for the best, but we should plan for the worst,” she said.

To the extent that it’s possible, Antoniello said generations beneath the baby boomers are already planning for a future in those terms.

“They also count on themselves having to work much longer than (their) parents, who often have worked longer than their own parents,” Antoniello said.

Even with people retiring at 65 today, Antoniello said, that still could be around 30 years of retirement — and could already, even with social safety nets in place, amount to a big hit to someone’s assets.

“For example, people are typically totally unaware of what medical expenses might be in retirement because they’ve been on an employer health insurance plan most of their lives,” she said. “Medicare has a cost to it, and it can be high if their income is high.

“People can end up spending hundreds of thousands throughout their retirement, potentially, on this.”

For Antoniello, the best way to handle wealth in a topsy-turvy environment goes back to planning for the worst — by making safe choices with your money and downsizing well ahead of retirement.

“With political volatility, it’s more important than ever to ensure that you’re as financially secure and independent as possible,” she said.

On Twitter: @ReporterBrett

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