Rules of Retirement

Rules of Retirement

Encourage clients to continue retirement savings during volatile times 

By Mike Weintraub 

Volatile markets are nothing new to most experienced advisors. But the goal of advising is to help clients think long-term: rather than wondering how they’ll make it through a rough patch, they should be thinking ahead to retiring in their desired timeframe with a sizable retirement fund. With experts predicting 2023 will be at least as difficult as last year, you may need to reassure clients who struggle to fathom the purpose behind extensive retirement savings during times of volatility. Encourage clients to stick to their goals with a look into how their retirement funds will increase over time. While your approach may differ based on client needs, providing the context of how their retirement plans will grow will assert the necessity of retirement savings in any economy. 

Rule of 72

Many consumers are unaware of the purpose behind starting their retirement funds early in their careers — after all, they have decades ahead of them to save. I like to counter this short-term thinking with the Rule of 72: Imagine that a local bank has decided to run an advertisement to entice people to open a new savings account. The offer shows that with a new account and a minimum deposit of $5,000 the bank will give the customer the latest iPad. This account comes with 3% interest. This may seem like a good deal, but how will the money grow for someone who is age 25 who has decades before retirement? Using the Rule of 72, you can calculate approximately how long it will take for the money to double. This equation is simple: take 72 and divide it by the annual interest rate. In this case, it would be 72/3. At 3%, it will take 24 years for the money to double, and the iPad will be an expensive paperweight.

Age Amount
25 $  5,000
49   10,000
73   20,000


It might be better to invest in stocks and bonds, which over time tend to have better results than bank savings accounts. Over long terms, equities may average returns over 10%.

(Note: If you invested $5,000 in the S&P 500 at the beginning of 1973, you would have about $631,718. at the end of 2022, assuming you reinvested all dividends. This is a return on investment of 12,534.36%, or 10.20% per year.)

So, in this example, we’ll use a more conservative interest rate of 9%. 72/9=8 years for the money to double.  

Age  Amount
25 $   5,000
33   10,000
41   20,000
49   40,000
57   80,000
65 160,000
73 320,000

Helping clients get better returns over time will help them meet their retirement goals.

Understanding this process will help your clients see the pros and cons behind certain savings plans. This can lead your client to investigate the investments in their retirement plan and provide a smooth transition into planning discussions. 

Retirement for employees

For many of your clients who are employees, their place of work provides retirement plans they can contribute to easily and their employer will match. However, not everyone contributes enough to meet the minimum for employer matching contributions. This minimum amount is necessary to capitalize on the opportunity. Pairing the employer contributions with a good investment will lead to a better nest egg as time goes on. 

With respect to employee contributions, encourage your clients to think bigger. Younger clients have the most time to allow their funds to grow and compound, which makes saving earlier in their career ideal. The more invested at the beginning, the more opportunities for the sum to grow as time goes on. If you explain the Rule of 72, you can also bring up their interest rate, overall return, and how that will impact their overall retirement savings. 

With this information you can help clients to determine if they need to establish additional savings to retire in the way they desire. The goal for most is to retire with enough savings that their monthly distribution matches the income from work to avoid drastically altering their lifestyle. 

Retirement for employers

When working with employers, the goal is to recommend a vendor or plan that can provide the best services for the desired price range. An important element to look for are the education programs the vendor can provide. Providing an opportunity to speak with a representative and have their questions answered, whether in a group or one-on-one setting, is important. The goal is to provide access and information so employees comprehend how to get the most out of a retirement plan. 

Encourage clients to provide a program that has automatic contributions to their employees’ retirement fund. Automatically enrolling employees (unless they ”opt out”) helps them reach the minimum contribution for employer matching. Then, encourage the clients to provide options for annual increase options, which then caps at 10% of the employee’s pay. This will provide ample opportunity to save for retirement and get employees the most out of a retirement plan. 

As your clients seek guidance in volatile markets, remind them about the purpose of their financial planning. You are aiding them in reaching the goals they set for their retirement. Educating your client on these basic concepts of retirement planning will encourage them and their employees to continue their contributions no matter the economic headwinds. As clients continue to plan their retirement, they will turn to you with an understanding of how to reach their goals and position you as their trusted advisor.  

Michael Weintraub, CLU, is a principal at Next Step Retirement in Walnut Creek, Calif. Mike has been a Million Dollar Round Table (MDRT) member for 47 years He is a Top of the Table member and former Chair of the Top of the Table. Mike is currently treasurer of Life Happens and on its executive committee. 

Mike founded Contemporary Pensions, Inc. (CPI) in 1973, a third-party administration (TPA) firm. In 2009, CPI was acquired by Portal Insurance Agency and after a short time Portal was acquired by Ascension Insurance Solutions. Mike’s position was president of the retirement plans division. Ascension was rebranded as Relation Insurance Solutions in 2018 and his role continued as president of the retirement plans division with responsibilities for managing the TPA as well as the marketing and sales operations of the division. Relation had approximately 450 employees.