On several occasions, my clients who were considering a buyout option alluded to a second career or starting a business. While both are admirable, I find most people are thinking it's a possibility when there's no real foundation to support it. They approach it like they're coming home from college and need a summer job. They often end up frustrated because there aren't many jobs available that fit their desired schedule, utilize their skills or provide a wage that makes it worth their time or energy. Furthermore, for those who want to venture into the business world, many find that franchise costs, tax and legal considerations, and just the time and energy it takes to run a business to be more than they bargained for. For clients who go into this next stage of life with fallacies instead of strong foundations, they may find it better for their overall financial situation as well as their marriage (and mental status) to stay in an environment where they know the game and players instead of heading into unchartered waters.
Advisors need to remind clients that retirement isn't always a safe, happy little place. It's actually nothing! It's completely empty and can only be filled by the things they bring to it. So, for clients who aren't bringing much to the table outside of money they are essentially bringing a knife to a gun fight ... but it doesn't have to be that way.
Advisors today have a powerful position when it comes to preparing and helping a client transition into retirement. It begins with removing them from the herd mentality, using your skill to influence others to help them recognize all the factors that will impact their ultimate retirement decision, and finally eliminating fallacies about the final phase of their life by building realistic plans and strategies instead of loose ideas. If you haven't already, don't be surprised to find yourself talking a client out of retirement sooner than later.
Follow Robert on Twitter @robertlaura. He is the president of SYNEGOS Financial group, co-founder of RetirementProject.org, creator of the Laddered Dividend Portfolio, and author of Naked Retirement. He can be reached at [email protected].