Over the years I've noticed that clients who retire but are not prepared for the transition tend to exhibit one of three egos: the Idler, the Conspiracy Theorist or the Homebody. While each has its own characteristics, my argument is that they all stem from low or lower self-esteem. As a result, an individual may need just as much help from his or her advisor in managing their self-worth as their net worth.

Usually, discussions about self-esteem relate to children and teens and how they understand their place in the world. But retirees also can have self-esteem problems that become exacerbated when they stop working. An advisor may be able to help clients avoid this self-destructive behavior and strengthen relationships with them.  

After some research, I define self esteem as the emotional and behavioral expression of one's perceived self-worth created by feelings of 1) achievement 2) competence 3) acceptance and 4) respect for oneself. Many, if not all these feelings, are often easier to maintain and build upon while clients are employed than while they are retired.  

The primary challenge is whether or not retiring clients will be able to fulfill the same level of expectations as they did in the workplace, or at a minimum, adjust their expectations for each of the contributing feelings based on their new lifestyle, choices, abilities and desires.  

In my experience, maintaining a sense of achievement can be the biggest challenge that retirees face. Achievements of all kinds are relatively easy to come by in the workplace because work generally includes a productive component. Take away the work and a person may not feel as productive or worthwhile, especially after a few months of doing nothing.   

This highlights the importance for both advisors and clients to incorporate some sort of meaningful goals and objectives (beyond those related to finances) into a retirement plan. This is particularly true for clients often identified as high achievers, such as business owners, doctors, attorneys, etc.

Some people do head into retirement with a general plan to embark on activities that they believe will produce a level of satisfaction similar to what they got from attained levels of achievement or rank in the workplace. But their self-esteem may drop if they don't meet their prior standards. A CEO, for example, who made a name for himself merging and acquiring companies may not feel the same sense of achievement by shooting par golf or walking every morning. General ideas and plans that don't pan out or measure up can have a negative effect on how one feels or acts.  

What typically manifests in this case is a retiree who just idles along. Because time is no longer a precious commodity and he has fewer demands, the Idler stretches tasks out to help occupy his available time. That's not to say that's bad behavior, but we all know clients who eat up more time than necessary or show up late and linger because there's no objective to their day. I'm not advocating that everyone in retirement become a "type A" personality or task master, but I believe many of those who putter around simply don't realize they need to either add more plans and objectives to their day and their lives, or ratchet down how achievement levels are influencing their post-work self esteem and, subsequently, shift their focus to other areas.  

A retiree's level of competency is another serious factor that can contribute to his or her self esteem. I'm not talking about impaired cognitive abilities, such as those brought on by Alzheimer's or dementia, but rather an individual's ability to perform a specific role or function as someone well-qualified for something.  

This may sound a little harsh, but if retirees are no longer using or improving their skills and abilities or haven't established a personal role for themselves in retirement, they can very quickly move from feeling competent to feeling incompetent or worthless.