In the middle of 2021, my wife and I had a semi-annual review with our wealth management team. After evaluating our financial blueprint, everyone seemed happy with the portfolio’s ability to provide us with the financial means for a comfortable retirement. My wife, Susan, then asked a hypothetical question, “What if Dave retired next year?” That started a lively discussion which ended with, “While we do not recommend that, it is possible. However, you’ll be adding a lot of stress into the plan.”
Although I have not retired, it was a fundamental moment for me. Retirement became very real. While we have had plenty of conversations about the use of our money in retirement, Susan and I never really went deep into the lifestyle we wanted to live.
Since I help individuals and companies identify and improve their time management, I decided to practice those techniques for retirement. I mapped out what I needed to personally do to make sure the money aligned with the lifestyle.
After reading dozens of research papers, articles and books, I was able to narrow post-career life to six categories: career mindset, time management, retirement mindset, financial mindset, anticipated lifestyle and planned activities.
I then began to test these assumptions with clients and prospects. I introduced an assessment tool called the Retirement Time Analysis (RTA) that allows people to examine their own ideas about retirement —unpacking thoughts and attitudes not covered by many financial advisors.
By collecting and analyzing data from the RTA for over eighteen months, I now assist clients considering retirement and ask them to take a hard look at their lifestyle plan. In turn, by learning about these areas from their clients, investment professionals can better understand and challenge them to live a life that maximizes the potential of their savings.
Career Mindset
A variety of independent studies indicate anywhere from 40% to 60% of U.S. workers feel their job is a significant part of their identity. Even more participants in the RTA (77%) agree or strongly agree that their career provides them with a substantial amount of personal value and significance.
To help clients with a potential post-career identity crisis, consider asking the following questions:
- What would happen if you had the money to retire today and your job was taken away from you?
- Why is work so important to you?
- How does your spouse/partner (and vice versa) feel about how long you should work until retirement?
- Have you explored options for other types of work that help provide meaning but still give personal flexibility?
Four questions will not solve any career mindset challenges, but they will encourage deliberations that help broaden and soften entrenched attitudes.
Time Management
Aristotle is credited with the term “Nature abhors a vacuum.” The same applies to time in retirement. A typical job takes up almost one-third of the time we are awake. Removing a career creates a time vacuum. Without a lifestyle plan, boredom and mental apathy will fill your clients’ time. With a strategy, their financial resources can be a gateway to filling the time void with meaningful activities.
The time management topic of longevity or lifespan tends to be avoided, particularly with couples. Data from the U.S. Census shows women tend to outlive men by some four years. Data collected from the RTA showed participants estimated their gap to be double that at eight years. Retirement will involve alone time, minus a significant other. Therefore, creating a robust goal strategy and front-loading important activities reduces the regret of clients wishing they had done more shared interests with their spouse/partner.
Retirement Mindset
Retirement can spark a wide range of emotions. Over 40% of the participants in the RTA are not sure they will enjoy retirement because they do not understand how they want to live. Help clients unpack their attitudes about stopping that work by identifying one of five different mindset types.
- Excited: The person can’t wait to retire and get out of the rat race. Without a lifestyle plan, they may quickly become disillusioned and frustrated.
- Apprehensive: The individual started personal life-planning but didn’t like what they developed and are now hesitant to retire.
- Pressured: Some combination of spouse, family, friends and coworkers insist that it is time to retire. Caving in without a strategy live can lead to a host of post-career second guessing.
- Militant: Openly hostile to retirement, this personality has no desire to stop working. However, work will stop at some point due to mental or physical health.
- Nonchalant. There is a hope that by overlooking retirement they will not have to worry about it.
The goal of any conversation with a client is not to persuade them into a particular mindset. Simply help make them be aware of their outlook. They need to decide what needs to change.
Financial Mindset
For years, the discussions my wife and I had with our wealth managers revolved around contributions and portfolio performance. The money accumulated in our retirement program but we intentionally did not think of it as personal wealth so we wouldn’t be tempted to access it for immediate use.
However, as our own retirement draws near, I am very aware of my financial mindset. I do not want to feel overly optimistic about our investments. On the other hand, I do not want to miss opportunities to accomplish personal goals out of fear that funds will not be there in the future.
Over one-third of those who have taken the RTA are not financially confident about retirement because they do not have a good understanding of their income/distribution and expenditures in retirement. As a financial professional, you see the numbers objectively. However, your clients could be operating from an emotional state. Encourage them to delve into their own details. Push them to set a comprehensive budget. The more you can help them see reality, the more confident they will be heading into post-career life.
Anticipated Lifestyle
An 80-plus year ongoing Harvard Study of Adult Development concludes that people socially connected (including friends and family) live longer and are generally happier than those who are not socially engaged.
A healthy lifestyle is also an active one. Only 32% of those completing the RTA strongly agree that they plan to be physically active in retirement. While wealth managers are not expected to be personal fitness trainers, pointing clients to materials that show the benefits of healthy living will demonstrate caring beyond just the health of the portfolio.
Planned Activities
Knowing what to do in retirement can be both a strategic and tactical exercise. When Susan and I developed our outline for a retirement budget, we came up with basic categories; travel is one of the largest buckets. After arriving at an annual number, we moved on to other expenses. However, we have since had to come back and almost double what we originally allocated. Once we really started to look at what we wanted to do, our number was way too low.
Goal planning can really help bring structure to post career life. A comprehensive strategy can look something like the following:
- Developing a life purpose statement.
- Creating a bucket list.
- Building long-term goals (2 to 4 years out).
- Setting detailed annual goals.
- Designing short-term goals (3 to 6 months).
The more frequently money and activities are discussed together, the better clients and their wealth management team will be able to address the various aspects of living post-career.
Career, retirement and financial mindsets — along with time management, anticipated lifestyle and planned activities — should not be dropped on a client in one sitting. There is no need to overwhelm. Plan one category at a time. You may find you can move quickly through one to then linger on another. When the question comes, “Can I retire next year?” be ready with the financial answer and then start asking the lifestyle questions.
Dave Buck is the owner of Kairos Management Solutions, LLC and founder of the Infinity Lifestyle Design program. As a Certified Retirement Planning Coach (CRPC), he helps business professionals who see retirement on the horizon craft a lifestyle strategy of purpose, fulfillment, and joy. Dave also works with financial planners helping their clients understand post-career life. To learn more contact him at dave@kmstime.com or visit https://infinitylifestyledesign.com/.
