Retirement is a major life transition that can turn clients’ worlds upside down if they aren’t prepared to handle it. What are they supposed to do when they no longer have a regular job to fill their time? The habits of decades can be tough to break. And, of course, there are the inevitable questions about money: will they have enough to support their lifestyle (even though you’ve worked for years to ensure—and reassure—that they will)?
As you work with your baby-boomer clients to ready them for retirement, you know you’re good at the financial end of things. After all, you’ve made a successful career out of helping people meet their financial goals. But what about the nonfinancial challenges that come with the transition to retirement? Are you doing enough to help clients recognize the need to prepare emotionally, not just financially?
Taking a more holistic approach to preparing for retirement can set clients up for a more satisfying future.
Money Isn’t Everything
Even when clients are prepared financially for their “golden years,” happiness doesn’t necessarily follow. A number of factors can contribute to a general sense of unhappiness—or even depression:
- For some, “retirement” is a dirty word, bringing visions of encroaching decrepitude. What’s worse, a bad attitude can be a self-fulfilling prophecy. On the flip side, we are in control of our decision to see the glass as half full or half empty.
- Retirees who haven’t lined up a new career or found activities or hobbies that interest them may struggle with a lack of structure and engagement. Still, a 2013 Merrill Lynch study, Americans’ Perspectives on New Retirement Realities and the Longevity Bonus, suggests that nearly 70 percent of pre-retirees plan to work at least part-time in retirement.
- Many people can feel isolated when no longer in the office every day. And spouses who are suddenly in each other’s company 24/7 can find themselves increasingly at odds. Instances of divorce between couples age 50 and older, commonly called “gray divorce,” are on the rise.
- Although many retirees today pursue a more active lifestyle—perhaps even more active than when they were working—decline is inevitable. Clients who don’t have a long-term care plan for both mental and physical health can find their later years particularly challenging.
These nonfinancial issues will only become more significant as retirements grow longer. In the past, people might plan for 10 years of retirement. Today, according to the Social Security Administration, the average life expectancy for a 65-year-old male is 84; for a female, it’s 86.6. That means we may be retired for as long as we’re employed.
How Can You Help?
Financial advisors are in a unique situation to help clients using a more holistic approach to preparing for retirement. One way you can add value to your client relationships is to ask about clients’ feelings surrounding retirement. Here are a few sample questions:
- On a scale from 1 to 10, if 1 is depressed and 10 is excited, how would you rate your attitude toward retirement?
- Do you plan to work after you have officially retired from your current job? If so, what will you do?
- What are you doing to prepare for retirement from an emotional or mental standpoint?
Remember: You can’t work toward a solution if neither you nor your clients know that there might be a problem.
Beyond asking questions and engaging your clients in a discussion about their retirement vision, you can serve as a resource for pre-retirees by hosting a seminar on holistic retirement planning or sharing links to books and websites that focus on retirement readiness via your social media sites. Two useful resources are What Color Is Your Parachute? for Retirement by John E. Nelson and Richard N. Bolles and www.retirementoptions.com, which offers nonfinancial retirement readiness assessments and coaching.
Of all the things you can do to help your pre-retiree clients, perhaps one of the best is to confront these issues yourself. What’s your personal retirement vision? What steps will you take to achieve it? Knowing how you will approach your own planning can help you arrive at more appropriate recommendations for your clients.
Joni Youngwirth is managing principal, practice management, at Commonwealth Financial Network®, member FINRA/SIPC, an independent broker/dealer–RIA.
