“Thanks for your guidance,” your client tells you after successfully retiring from a 40-year career. Hopefully you have been helping prepare them for a while for this big day and talking to them about their plans for their post-work life. But your job isn’t over. Retiring and talking about retirement are two different things. Now, more than ever, they may need some assistance and maybe even pep talks about how to enjoy a successful and meaningful initial year of their long-awaited retirement. As many of us have read, the initial year of retirement is critical to your client’s overall success and happiness during this important phase of life.
I can personally attest too to how critical it is, and how important it was to have these conversations ahead of time. In 2021, I retired as a professor of accounting at the University of Illinois at Urbana-Champaign after a semi-retirement as a senior financial executive for Hershey Entertainment & Resorts in 2014. Like many of your clients, I reached out to our financial advisor numerous times during our initial year of retirement, which was very reassuring.
Here are some of my tips on three important topics to discuss with your clients to help coach them for a successful first year of retirement:
Finances
As I approached my retirement in 2021 after a rewarding career, my wife and I collaborated with our financial advisor to determine our streams of income in retirement. As 2022 has taught us, inflation can have a major impact on retirement needs. Higher prices combined with greater medical expenses in our older years made it critical to ensure our income and investments could support our longer lives.
Adjusting one’s mindset from building our nest egg to spending it can be challenging. To make your client’s initiation to retiree life easier, help them create a plan for how they will pay themself in retirement. Begin by tallying their income sources (e.g., Social Security, 401(k), IRA, pensions) before determining which ones they will tap into first. Next, estimate their cash needs for the first year. Planning this can help ease worries and reduce their risk of overspending.
I did not anticipate, even with my accounting and financial background, how much more I would feel the emotional impact of macroeconomics. Your clients are likely to feel this too.
What challenged me a lot during the initial year of my retirement in 2022 was watching the stock market suffer its worst year since 2008 as overall markets plunged 20%. Sticky inflation and aggressive rate hikes from the Federal Reserve battered growth and technology stocks and weighed on investor sentiment throughout the year. Geopolitical concerns and volatile economic data also kept markets — and me — on edge.
The good news is that by sticking with our long-range plan in collaboration with our financial advisor, my wife and I were able to recoup over half of these losses with the positive returns experienced last year in 2023.
Takeaway
Remind your clients that you are not going away just because they are not working anymore, and that you are there for them whenever they want to check in for reassurance that their income and cash-flow plans are sufficient. My wife and I frequently meet or speak with our advisory team often, which has been very comforting in our early phase of retirement.
Together, you and your client can look at the impact of taxes, evaluate their portfolio diversification, and prepare for the legacy they would like to leave their family and others. Even if they do not want to know all the gory details, they may feel better from understanding the overall big picture.
Purpose
Try asking your clients about the promises they have made to themselves, their spouses or others about what their retirement will include. For example, if your client has promised distant relatives they will reconnect, then they could organize a family reunion. Your clients could set a date to fulfill their dream vacation or find an instructor who can teach them to play a new sport or start an exercise program.
For example, during our first year of retirement, my wife and I completed a ten-day guided trip with Tauck Tours to four Canadian cities. We joined eleven interesting and delightful couples from across the U.S., which was a wonderful and fun-filled retirement trip.
Although I am retired, I still want to add value and feel valued. Your clients likely feel the same way.
In addition to traveling and spending more time with my family, I plan to continue to serve on boards that mean a lot to me.
Just before I retired, I accepted a board of director position on the Hershey Employee Support Fund (ESF). This fund provides immediate short-term financial assistance to eligible team members experiencing financial hardship. While I love being part of this ESF committee that has helped numerous employees since its 2003 inception, it also allows me the opportunity to reconnect with some of my favorite coworkers from my 23 years at Hershey.
My wife, retired from a stressful career as a pathologist, now assists with local social service agencies helping the Philadelphia homeless population. One agency she works with, Broad Street Love, recently asked her to work part-time in their busy mailroom operation that serves over 5,000 guests. She loves the purposeful mission the agency provides and has periodically invited me to help sort the mail.
What Matters Most
The decisions I have made so far in my initial year of retirement have given me a new perspective on what matters most in my new phase of life. As you talk with your client about their purpose, you might bring up the following issues and ideas:
Sleep matters.With less stress in my life, I sleep so much better. Now I get my full eight to nine hours of sleep plus a brief 20-minute afternoon nap on some days. (Best practice: Set a timer for 20 minutes so you do not impact your nighttime sleeping!) As we know from studies, sleep is very important for overall health.
Friends matter.I have reconnected with several friends from my childhood and prior coworkers at both Hershey and University of Illinois. Moving to a new larger city can make the process of making new friends difficult. Recently, I have gained more local friends thanks to starting a chess club in my condominium building. We plan to join a pickleball club within the next year which will give us new friends that we will see on a more regular basis.
As you get older, an active social life can dramatically change your state of mind — our third topic.
State of Mind
It is normal for people to feel both excitement and trepidation during their first several months as a new retiree. You are eager for more time to connect with friends and family and do the activities you love. Stepping away from your career can also reduce your stress level and free you from the burden of having competing priorities.
However, saying goodbye to your workplace and a regular paycheck may trigger anxiety and sadness. As a nerdy accountant, my biggest challenge was not receiving a monthly paycheck during the fall of 2021 after receiving one for 40 years or 480 months!
I am enjoying retirement immensely. But it is not always easy growing old. At age 64, there are more health issues to contend with. As you age, you lose more family members and friends. Then there is the stark reality that you or your spouse might have to live alone for some part of your retirement.
For clients experiencing mixed feelings, it can be helpful for them to acknowledge them, both to themselves and their partners or trusted friends. You might remind them why they chose to retire and encourage them to relish all that they accomplished to reach this point. And remind them that it is time for them to turn their attention to the things they have always wanted to do.
For me and my wife, this led to regular exercise, spending more time with family and friends, learning a new sport, and authoring a book to help others achieve happiness in their lives.
Another idea that could help keep your clients focused on the positive: Recently, I read a New York Times article by Melissa Kirsch where she asked her readers to submit the best changes to their routines in 2023. One reader responded, “Each week this year I wrote something that happened that I was grateful for on a slip of paper and put it into a jar.”
As author Dennis Friedman remarked in HumbleDollar, this is a great idea, and “a wonderful way to try to stay positive when things are not going your way. If we write down some of the good things in our life that we tend to forget, we can revisit them during challenging times. We might also put the jar where we can see it, so it is a constant reminder of all the positive things in our life.”
Ice Breakers
In summary, these three key topics (finances, purpose and state of mind) are critical discussions to have with your clients to help guide them to a successful retirement phase. Clients may volunteer information in these three areas, but if not, you may want to invite them to share by asking questions, such as:
What promises have you made to yourself or others about how you will spend your retirement?
What is most important for you to do or accomplish in your first year?
Would you like to meet with me more frequently in your first year to check in on how things are going?
Do you feel uncertain about anything as you leave the workforce? If so, what?
Not needing to work again, if you choose, is a huge blessing.The additional time it presents, along with not being anchored down to a J-O-B provides some much-needed freedom in life. Helping your client navigate a successful first year of retirement can set the tone for a long, happy retirement.
