1. You are the magician.  You have worked with your client for years.  They are happy with the results they've achieved.  An incredibly long bull market has helped.  They think at the last moment you will pull a rabbit out of your hat and suddenly they will have enough money. You are their "fixer." Whatever financial trouble they get into, you will say "No problem."

Reality:  You are an experienced professional and a trusted advisor, but you can only assemble a "hand" with the cards as they are dealt.  If interest rates rise and the stock market levels out of falls, they will need to live within their means.

2. A magic product will appear.  It will be something that provides high current income and maintains principal value while delivering any upside the stock market adds that year.  It will preserve their financial cushion while enabling them to live comfortably.

Reality:  Any product with those antigravity-like features will either be a fraud or come with fine print indicating it doesn't have to deliver if market conditions are unfavorable.  Your client needs to make do with the standard products that have been around forever.

3. Interest rates will suddenly return to 8%.  Rates look set to rise.  The Federal Reserve tends to raise rates in tiny increments, like one quarter of a percent.  It's possible rates will get back up to 8% someday; however, it's likely the stock market would suffer during the journey.  Clients probably wouldn't be able to move assets from a stock market that happens to be at an all-time high at that exact moment into fixed income returning 8% forever and ever.

Reality:  Clients will still need to work with lower interest rates or look at investments like total return stocks.

4. Inflation is temporary.  Gosh, we hope so.  It's like everyone has gotten onto the "lets raise prices" train.  Some prices will continue to rise, regardless.  Health care is a good example.  It's been rising far more than inflation for a long time.

Reality:  Clients are going to need help continually shopping around for health insurance that meets their needs while keeping premiums down.  You can help, but you aren't a miracle worker.

5. The government will solve their problems.  The population is aging.  Older people vote.  Therefore, the government will increase Social Security benefits so it resembles a living wage. Therefore, I don't need to save for retirement!

Reality:  Social Security is only one component of retirement income.  Your client needs to provide the others.

6. 10% is a reasonable withdrawal rate.  Since the stock market has historically returned about 10% over decades, I can take that much each year and still maintain my principal value.

Reality:  10% might be the historical return, but it doesn't do it every year and not in a straight line.  You don't know what the  future holds. Your client needs to anticipate years when the market's return is negative.  They need to have reserves so they don't need to withdraw in those years, otherwise, they can dig a pretty deep hole in their retirement savings they won't be able to refill.

7. They will spend much less in retirement.  They assume they won't need new suits or be buying lunch in town.  Expenses will plummet.

Reality:  Expenses drop slightly, maybe 80% of their pre-retirement income will be their new spending level.  Spending might go up if they get the travel bug.

8. They will move to Mexico or Eastern Europe. They've heard about places where you can live on only your Social Security income.  They look so pretty in the pictures.

Reality:  Foreign places with low costs of living are usually not known for their fantastic health care.  Health insurance purchased in the US stops at the US border.  We haven't even touched on political instability or the language barrier.

9. Their children will take them in. They brought them into this world.  Surely that counts for something.  If they foul up their own retirement, they can move in with their children.

Reality:  Their children have lives and families of their own.  If they don't send birthday cards or show up over the holidays, it's unlikely they will be getting the spare bedroom ready.  Your client is responsible for their own retirement.

Some clients don't give retirement planning much attention because they feel it will sort itself out somehow.  They need to be prepared.

Bryce Sanders is president of Perceptive Business Solutions Inc. He provides HNW client acquisition training for the financial services industry. His book, "Captivating the Wealthy Investor" can be found on Amazon.

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