It has been said that the aging of baby boomers—those born between 1946 and 1964—is analogous to a bowling ball moving through a python. At each life stage, the vast numbers of boomers have made significant impacts on our society.

So with over 75 million boomers already beginning to reach age 65 and many more to come, expectations of societal change are considerable. The fact that boomers as a part of the US labor force shrank from 82 percent in 2003 to just 66 percent in 2013 gives us a sense of the magnitude involved.[1]

Many baby boomers will be challenged with creating a sustainable, consistent retirement cash flow to allow them to focus on things they really care about and to enjoy a “Life Well Lived.” The task is compounded during a low interest rate environment. Whereas in earlier times, interest-bearing investments such as CDs and bonds could provide generous, steady cash flow, today’s income investor may need a different, perhaps more hands-on approach.

The challenges will vary to the extent that some impact society as a whole (“macro” oriented), which require both effective preparation and prompt response. Others occur within our personal life experience (“individual” oriented) and therefore require more introspection. Similarly, some are more financial while others are lifestyle based. Our clients find gratification and confidence with this holistic approach, which sees effective retirement as a balance between the financial and emotional aspects of retirement planning.

2017-10 Macro-Individual Challenges

Our process, refined over more than 35 years of delivering exemplary award-winning service[2], has identified nine key challenges that, when properly addressed with solutions articulated herein, help our clients achieve retirement confidence. A brief mention of each challenge is followed by the resources we make available within this publication or within our practice, to support a successful resolution.

1. Longevity Risk: How can I be confident of not outliving my savings?

Life spans are growing with improved lifestyles and medical technology. And with increased longevity comes the added challenge of assuring adequate financial support for those additional years. The statistics are impressive:

• A male age 65 has a 35 percent chance of living to age 90
• A female age 65 has 46 percent chance of living to age 90
• A couple age 65 has a 50 percent chance of one living to age 90




Keys to successfully address the Longevity Risk are:
• Objectively evaluate the feasibility of your goals (see our white paper: Are Your Financial Goals Achievable? The Importance of Having “Your Number”).

• Create a realistic budget (see our white paper: What Are Your Retirement Expenses? For How Long Can Your Savings Cover Them?).

2. Paradigm Risk: How can I replace income from traditional retirement sources such as pension and social security?

The fact is, worker participation in employer funded defined benefit pension plans is less than half of what it was in 1990, while workers covered by employee funded defined contribution plans have doubled over the same period.[3] Further, social security as a percentage of total retirement resources for those age 65 has fallen to just 38 percent and continues to represent a declining portion of retirement resources.[4] In our lifetimes we have witnessed a shift from a caretaker society, where institutions provided for our retirement support, to a self-sufficiency society where much more of our retirement support is left to ourselves.

Keys to successfully address the Paradigm Risk are:

• Develop an effective cash flow strategy (see our white paper: Will Your Withdrawal Plan Sustain You Through Retirement?).

• Optimize your social security retirement benefits (see our white paper: Managing Social Security Retirement Benefits).

• Create your own personal pension plan (see our white paper: Can Annuities Benefit Your Situation?).

3. Inflation Risk: How can I preserve purchasing power?

Relatively low inflation rates can lull us into a false complacency. But even at modest 3 percent levels, $1,000 in today’s dollars will buy just $737 worth of goods and services in 10 years (26 percent reduction in purchasing power), and $543 in 20 years (46 percent reduction in purchasing power). Plus, a growing number of economists suspect that recent adjustments to the government’s inflation measures may be understating the true inflation rate.[5]2017-10 Shrinking Dollar

Keys to successfully address Inflation Risk:

• Understanding the underlying inflation rate (see our white paper: Controversy Over Inflation: Is There More Than We Are Aware Of?).

4. Investment Risk: How can I not be derailed by market losses?

Market risk is often measured by volatility. It is important to balance the need for growth with minimizing the potential for investment loss

Keys to successfully address Investment Risk are:

• Understanding how annuities can provide steady cash flow (see our white paper: Can Annuities Benefit Your Situation?).

• Understanding how bonds may have more risk than previously thought (see our white paper: Bond Investing: Is Following Conventional Wisdom Always Best?).

• Understanding how Exchange Traded Funds work (see our white paper: Are ETFs Right For You?).

5. Emotional Risk: How can I find fulfillment in retirement?

Major life transitions such as retirement can invoke unforeseen emotional responses that can inhibit quality of life. Clients have found that anticipating and proactively addressing these can make a significant difference in their retirement enjoyment.


• Guilt: After a lifetime of building savings, many can feel guilty over spending as they reach retirement.

• Reduced Self-Esteem: Ending a career can mean a loss of identity and self worth.

• Isolation: When work ends, there can be a loss of social connections.

• Depression: Upon ending a career, there can be a loss of purpose and life involvement.

• Fear and Anxiety: These feelings can arise from the unexpected, the unknown and the “what if’s.”

• Regret: Uncompleted wishes, desires and fantasies about who you are and what you want to experience in life. These can involve experiences you may want to have that add passion, purpose and joy to your future. However, there can be burdens from “ghosts of the past” that may dilute potential enjoyment.

Keys to successfully address Emotional Risk include an enhanced self-awareness of your priorities, likes and dislikes.

• Understanding your core priorities and dreams through exercises such as the Values-Based introspection process we offer our clients.[6]

2017-10 Maslow's Hierarchy of Needs

6. Medical Risk: How can I prepare so that medical and long-term care expenses do not prematurely deplete my savings?

2017-10 Medical Risk

Keys to successfully address Medical Risk include:

• Understanding how long-term care needs can be insured (see our white paper: Can Innovative Strategies for Addressing the Long-Term Care Challenge?).

7. Withdrawal and Tax Risk: How can I prioritize my withdrawals to protect against tax erosion and premature depletion?

Keys to successfully address Withdrawal and Tax Risk include:

• Understanding how tax planning can preserve your savings (see our white paper: Will Your Tax Planning Help Sustain Your Retirement Nest Egg?).

• Understanding how to prioritize your retirement withdrawals (see our white paper: Will Your Withdrawal Plan Sustain You Through Retirement?).

8. Legacy Risk: How much can I spend? How much should I leave to heirs and philanthropies?

It is all about trade-offs and prioritizing your retirement resources.

2017-10 Legacy Risk

Keys to successfully address Legacy Risk include:

• Understanding how to quantify and balance your competing financial goals (see our white paper: The Importance of Having “Your Number”).

• Understanding how to prepare your heirs for inheritance (see our Estate Planning white papers).

9. Oversight Risk: How can I remain on track and be proactive?

To help our clients stay engaged and feel in control of their finances, we recommend an initial analysis and personalized “Point-in-Time” reviews which is depicted in the attached graph.


This discussion introduces how the following articles can help you achieve financial confidence. I trust you will find this a valuable resource capable of making a significant difference in your retirement planning efforts. Please do not hesitate to let me know should you have any thoughts or questions.

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Wells Fargo Advisors Financial Network LLC (WFAFN) does not provide tax or legal advice. We strongly recommend an advanced tax and estate planning expert be contacted for further information. Any opinions are those of Mitchell Kauffman and not necessarily those of WFAFN. The information has been obtained from sources considered to be reliable, but Wells Fargo Advisors Financial Network does not guarantee that the foregoing material is accurate or complete. Prior to making a financial decision, please consult with your financial advisor about your individual situation.

Mitchell Kauffman provides wealth management services to corporate executives, business owners, professionals, independent women, and the affluent. He is one of only five financial advisors from across the U.S. named to Research magazine’s prestigious Advisor Hall of Fame in 2010, and among a select list of 100 over the past 20 years.

Inductees into the Advisor Hall of Fame have passed a rigorous screening, served a minimum of 15 years in the industry, acquired substantial assets under management, demonstrate superior client service, and have earned recognition from their peers and the broader community.

Kauffman’s articles have appeared in national publications, and he is often quoted in the media. He is an Instructor of Financial Planning and Investment Management at the University of California at Santa Barbara and Santa Barbara City College.

For more information, visit or call (866) 467-8981. Investment products and services are offered through Wells Fargo Advisors Financial Network LLC (WFAFN), Member SIPC. KWM is a separate entity from WFAFN.

1 “What Baby Boomers’ Retirement Means for the US Economy,” by Ben Casselman, Five Thirty Eight Economics May 7, 2014
2 “Hall of Fame”
3 “Better Financial Security in Retirement? Realizing the Promise of Longevity Annuities,” by Katharine G. Abraham  and Benjamin H. Harris Nov. 6, 2014 Brookings retirement-longevity-annuities-abraham-harris
4 “Just the Facts on Retirement Issues” by Center for Retirement Research at Boston College, Feb. 2003, Pg. 3
5 “Controversy Over Inflation: Is There More Than We Are Aware Of?,” by Mitchell Kauffman, MBA, MSFP, Certified
Financial Planner, 2011
6 “Values-Based Financial Planning: The Art of Creating an Inspiring Financial Strategy,” by Bill Bachrach

Values Based Financial Planning

Many people find that having an independent advisor can provide financial confidence — by clarifying economic complexity, navigating through turbulent markets, and providing a buffer between them and the market.

Discover how KWM Wealth Advisory’s extraordinarily personalized approach to investment planning and management can help you on the road to a Life Well Lived.