Retirement planning, as we know it, is almost completely meaningless. There is a chasm between what most financial advisors do and what clients need and value (even if the client doesn’t realize it at the time). Cash flow projections are great and portfolio construction is important … but it’s not enough. Not by a long shot.
“So, what do you want to do when you’re retired,” the trusted advisor asks the client. It’s a fair question, but how many people really know or even have initial thoughts?
The answer, especially for many successful career/achievement-focused people is, “No clue.” The reason is simple: Over the last five or six decades, they’ve been singularly aimed in success/achievement-oriented thinking — so what the heck does retirement even mean? There’s no established glidepath for driven professionals/entrepreneurs/executives to imagine a life without their careers.
In general practice, retirement planning means providing clients with a safe spending corridor so their assets will last to age 90, 95 or 100. This might include calculating the anticipated cost of long-term care and some foundational assumptions on inflation, future planned expenditures (how often cars are replaced, the new roof or the cost of country club dues) and other assumed data.
But it’s a far cry from digging deeply into what retirement is all about. Retirement is, after all, the wildcard of life.
Many Unidentified Obstacles
We can’t know how long we’ll live, how healthy we’ll be, where we might live, how we will use our time and the costs associated with everything. How does traditional retirement planning help clients imagine their lives post-career? While many members of the financial life planning community do a good job along this line, there are many unidentified obstacles.
Think about it: We are aimed toward career, success, achievement and wealth accumulation since childhood. Come on, you can recall hearing your parents telling you that you needed to work hard in the third grade because fourth grade is next and that’s even harder … and on and on and on it goes, through college and beyond. Each transition a preparation for the next test, the next challenge, and the next obstacle.
Now consider that when someone’s career is over the social structure of work is gone, the reason to get out of bed in the morning is gone, the paycheck is gone, the routine is gone. Pow! Now are you telling me that real retirement planning, beyond a Monte Carlo success rate isn’t important?
For example, here are some comments I’ve encountered over the years:
- “I’ve been an attorney for the last fifty years. I don’t know anything else and I don’t even know where to start.”
- “After I sell my business, I am going to play golf; that’s all I want to do.”
- “I’ve been a doctor all my life, I don’t want to be a ‘mister.’”
- “My nose has been to the grindstone for so long, I don’t even know who I am anymore, forget about who I’ll be after I stop working.”
- “I’ll never retire. I love what I do.”
Does any of this sound familiar? And yet, as planners, we forge ahead playing with numbers, assumptions and generally doing the best we can to provide meaningful information.
Many in the financial industry lack the desire or ability to help beyond portfolio construction or spitting out plans that show expected levels of success (based on current numbers, current thinking, and assumptions).
Leading Progressive Conversations
Retirement planning should include frank conversations with clients about the need to focus on life after work. Don’t get me wrong: This is not easy, and resistance is natural from the clients’ perspective since they’re not “there yet.” But this doesn’t mean that it cannot be part of a progressive conversation.
For example, take a deep dive into thoughts about legacy. The question ‘How would you like to be remembered’ is impactful and can lead to potential actions.
Here’s a story:
A client related their desire to be remembered as someone who had a great sense of humor, someone adventurous and curious. Someone who loved nature and cared about other people.
There’s so much in these two sentences that can be fuel for deeper discussion. For example:
- What would you like to do that exemplifies your desire to be adventurous and curious?
- What activities or actions align with that desire?
- How will you be empowered to create a life that has meaning?
Getting People “Out of Their Heads”
Professional coaching is another trach that can be explored to help clients move outside their current thinking and into a more expansive and self-determined path. The coaching process provides space and dynamic interaction between client and coach to help excavate the client’s true desires. I think it’s fair to say that most financial professionals are not trained to be coaches because coaching and advice-giving are two distinct practices.
Impactful retirement planning is a progressive process of helping clients imagine the aspects of what will provide meaning and purpose, what will be fulfilling and ideas about how to get there.
“A significant problem is getting people out of their heads and mind space to consider their future selves.”
A significant problem is getting people out of their heads and mind space to consider their future selves. Imagining their life after career and their concomitant needs and wants is no simple check-the-box solution. It requires time, discussion and the willingness of both the client and the advisor to work on non-financial projections. Issues like family health history, personal fitness and an understanding of how they connect socially come to mind. Even if you don’t pry into specifics, planting the seeds for consideration is important.
Impactful retirement planning also includes helping clients ponder the ‘what-ifs’ surrounding housing, health, career disruption, changes in family situations and other potential challenges. In the case of married or partnered couples, their ability to converse about their individual needs and how they communicate with each other can be challenging but these conversations are vitally important in planning the retirement they desire.
Mining the “Resilience Muscle”
As you move along this trajectory, you will want to mine the client’s “resilience muscle.” Helping a client understand that each transition creates friction, worry, anxiety, fear and turmoil. Walk them through instances in their lives where they experienced transitions that they came through successfully. All these life transitions, in many ways, are just the preparation for the big one at retirement. That’s when the structure of everyday living is stripped away, leaving a void that needs to be filled, supported and healed.
So, what is the advisor, counselor, planner or consultant to do?
Here are a few ideas:
- Get trained in financial life planning.
- Hire or work with a life coach.
- Learn to ask important questions.
- Learn to listen deeply.
- Ask your retired clients about their lives and challenges.
- Educate your clients about the non-financial challenges in retirement.
- Have a few names of therapists handy if the need arises.
Real retirement planning begins with the personal values of the client, but the numbers produced in a financial plan, with the exception of presenting a safe spending corridor, are insufficient to truly help clients successfully transition into the stages of retirement.
Michael Kay, author of “The Business of Life” and “The Feel Rich Project” joined the financial services industry in 1985, after nearly 10 years as a CPA. He founded Financial Life Focus LLC in Livingston, N.J., in 2001 and recently transferred ownership to his partner. Michael has been married to his college sweetheart for 44 years. His Chapter X project is available at www.michaelfkay.com along with his podcasts (Apple, Spotify or wherever you listen). Reach him at email@example.com, firstname.lastname@example.org, on Twitter (@michaelfkay) and on LinkedIn.