Underliving Wealth
Another big drag on retirement is when clients “live in too much fear that things are going to go wrong and therefore they have to continue to put their arms around their wealth and they are afraid to spend it,” Sullivan said.
This can cause big fights between spouses. Not long ago, Sullivan said he met with a man who was retiring. The man’s wife was looking forward to traveling the world, but the husband was worried that they couldn’t, even though they had three times more money than they needed, Sullivan said.
Sullivan suggested that they create a separate account, call it “a bucket of money” and do whatever they wanted with it. They would still have had enough to be comfortable if they blew what was in the bucket. The couple had a blast on a monthlong trip to Europe, Sullivan said.
He added that sometimes you have to give people “permission” to spend a little of their own money.
Healthcare
Research has shown that retirees can expect to pay well over $300,000 in costs for healthcare. Sullivan said the key to dealing with it is to help clients prepare for it.
What they don’t want to do is keep their heads in the sand and avoid dealing with it. Sullivan said, “Our role is to make sure we are talking to the clients in advance about it and giving clients time to be thinking about it.”
The advisor’s job is to look at where the potential risks are, and that includes healthcare risks, not just for the clients but also possibly for the clients’ kids and parents, he said.
Starting A New Business
People sometimes get so restless in retirement that they think of starting a new business—by themselves or with friends. They could be in for trouble, Sullivan noted. “It’s probably some of the biggest mistakes I have seen some people make,” he said. “It starts out small, but then you don’t want it to die so you keep pouring capital in it.”
In these situations, he usually sits down with the clients and talks through the business plan and walks them through the “five P’s”—purpose, people, process, profits and pricing. “If they haven’t thought those things through, then they are not ready,” he said.
Elder Fraud
This is another growing problem and troubling threat to retirees. With people living longer, there are more wealthy people over age 60, and they are being targeted by fraudsters. Sullivan noted that his mom often gets fraudulent calls, which she reports to him. Email phishing is another scary phenomenon.
In these situations, he said it helps if the clients’ assets are with an advisor who has some oversight and control over them. Financial fraud not only affects the elderly, he said. “It comes from all directions. You just have to be mindful.”