I was never a fan of the term “gap year.” Typically, it involves suspending education for a semester or a year in between high school and college, or before beginning post graduate education. Students take time to travel or plan out new experiences they feel they will be unable to do in the future. This time is also used to clarify their field of study or career path.
After completing his bachelor’s degree, my son decided he was going to take a gap year before starting his master’s. Being a constant planner, I pushed back against his desire to choose the time off. However, Kenneth did experience some significant life challenges during his undergraduate period, and so he was adamant that he wanted the time to reset.
As I look back now, I am glad he did not take my advice. That year off helped refresh and reenergize him (as well as taught him some valuable life lessons). He embraced graduate school with a new sense of determination.
If it is good for students to pause life for up to a year to enjoy the present and figure out the future, why not your clients who are fast approaching retirement?
According to a recent study, only 10% of U.S. adults comprehend or have assessed their longevity and how that will impact their life after 65. As a financial professional, you are in a unique position to introduce the concept of a post-career gap year and discuss whether it could be right for them.
What is a post-career gap year?
A post-career gap year is a period leading up to or in retirement where the individual invests time to understand what life will be like when they exit their professional career.
The gap year can begin well before retirement, or on the first day. The intention is for your clients to recognize life will change significantly and they have permission to invest time and energy to figure it out. Each client’s journey will be customized based on their career status, purpose in life, the extent of their social network, and their financial mindset.
Many pre-retirees or retirees will just spend time thinking about retirement during a gap year. They don’t have to be engaged in the types of activities that students often do during gap years — such as traveling, working part-time, doing community service or taking classes without being matriculated — although some may wish to.
Testing the waters
I recently talked with a woman who just started retirement. She is financially prepared but is not mentally and emotionally there yet. In essence, she is in a gap year.
As we discussed her options, we uncovered some key elements to her situation that need to be answered in the coming year. She’ll decide if starting her own business will become a part of her retirement life. She enjoys living part of the year abroad but needs to solidify if she can afford a permanent residence or if renting is better. She and her husband didn’t consider how much time they are spending together. Therefore, they’ll be working through shared and independent goals.
Her gap year will bring clarity to post-career life. Walking your clients through an intentional process can help clear up any uncertainties as well.
Hard stop or soft landing?
Only 47% of participants in my Retirement Time Analysis (RTA) feel they are ready to leave their job to pursue personal interests in a retirement lifestyle. Taking a gap year could allow them to figure out the right way for them to disengage from their career.
Depending on their profession, it might involve a gradual transition away from professional life to start their retirement free from any feelings of regret or anxiousness. Another approach is to set a hard date a year in advance and create planning benchmarks to prepare for post-career.
Either way, the hard or soft landing requires dedicated lifestyle planning.
Ask your clients the following questions to gauge their readiness:
- If I had the power to make you stop working and live off your portfolio, what is your initial reaction?
- Have you thought about the ways in which you want to exit your career?
- What are the options what will allow you to gradually retire?
Defining identity and purpose
When they retire, typical business professionals will gain an additional one-third of free “awake time” during the week (assuming a 40-hour work week). Data from the RTA shows that only one-half of those approaching or in retirement have a defined purpose in life. The combination of no purpose and a lot of extra time available can be a recipe for a dysfunctional lifestyle.
Developing that purpose into lifestyle strategy can be a complex undertaking. Using a gap-year philosophy takes the pressure off and allows for trial and error to find the right approach.
Explore your client’s perspective and attitudes by asking these questions:
- Without work or career, what is your purpose in life?
- Without using the phrase, “I’m retired,” what will you tell people when they ask you, “What do you do for a living?”
- How does a typical week look like for you in retirement life?
Solidifying their social network
According to the National Institute of Health, “An important function of a social network is to provide social support, especially emotional and instrumental support, to members of the network that eventually influence mental and physical health (especially for those older individuals).”
The older we get, the smaller our social network becomes and the easier it is to be socially isolated.
For many people, work provides more than half of our personal connections. Using a gap year to solidify personal relationships, as well as to develop new ones, sets your clients up to be engaged with others in meaningful and beneficial ways.
Gently challenge your clients with the following questions.
- How many of the people you work with today will you really stay connected with in retirement?
- How will you stay socially active in your post-career life?
- Who is your go-to and must have relationships that will stay with you for the rest of your life?
The reality of financial life
You might be thinking, “If my clients need a financial gap year, I have not done my job well.” Fair enough, let me clarify. Only 48% of respondents to the RTA have developed a retirement budget. While you have created a portfolio for them to live in retirement, over one-half of those you serve may not understand how to make the most of their assets.
Additional Reading: The Retirement Your Clients Didn’t Sign Up For
A financial gap year lets them appreciate the transition of where and how their money comes to them. They can examine and analyze what they can do to maximize the enjoyment of their investments.
Enlighten them with a few simple questions.
- What kind of budget process do you have in place for when you retire?
- What can I (the financial professional) do to make you confident in the life you plan to live?
- On a scale of 1 to 10, how confident are you that you have enough money to live the way you want in retirement (1 having no confidence, 10 being absolutely confident)?
Filling in the gaps
Introducing the concept of a post-career gap year allows you and your clients to engage in a conversation about retirement without it being an absolute change in status. A change in career can be looked at as a phased disengagement. Creating identity and purpose does not have to be instantaneous, but rather a systematic approach. Knowing who your clients think is important to them is planned, leading to a solid and meaningful social network. Introducing real-life details to the financial strategy opens your clients to a process of maximizing their portfolio.
My son benefited from his gap year. It brought him clarity and focus for the remainder of his academic life. He powered through his master’s program and is currently working on a PhD at Cornell. Your clients might benefit from their own post-career gap year to energize them to live a more intentional and meaningful retirement life.
Dave Buck is the author of the book “The Time-Optimized Life”, owner of Kairos Management Solutions, LLC, and founder of the Infinity Lifestyle Design program. As a certified retirement planning coach (CRPC), Dave works with financial services providers helping their clients create a post-career lifestyle strategy. To learn more, contact him at dave@kmstime.com or visit Infinity Lifestyle Design.
