Covid-19 and other factors are forcing clients into early, and sometimes unwanted, retirement.

Financial advisors are faced with helping clients rearrange their finances and deal with the psychological impact of this new life phase, two advisors said in recent interviews. Retiring earlier than expected, whether willingly or unwillingly, is a life changing decision for clients and their families. Advisors can prove their value by walking clients through different scenarios and helping them adjust to the new, unexpected retirement lifestyle, they said.

Taking a new look at the financial plan “does not necessarily mean the client has to be more conservative just because he or she is retiring,” said Tom Burmeister, vice president of financial planning at Advicent, a financial services and software company in Milwaukee. “You still want to take advantage of the gains in the market, while putting some of the portfolio in conservative investments, or even liquid assets.”

While the financial work is being done, an advisor must consider the person behind the portfolio, said Ben Taatjes, president and CEO of Taatjes Financial Group in Wilmar, Minn. He noted that an advisor is not doing his or her job—and is missing an opportunity to help —if they are not considering the psychological aspects of forced retirement.

The advisors said they have been faced with a lot of early retirement situations recently because of job losses due to the pandemic and people taking care of their own and family members’ health.

“We take an inventory of income sources and make sure we are leveraging the income streams, including Social Security, nonqualified and qualified accounts, in the right order for tax purposes,” Burmeister said. “Seventy-five percent of people who are about to retire say they want to keep working but only 15% actually do. You also have to consider health-care costs and health insurance.”

He said he has not had to tell any clients they could not retire. "But they may not be able to have the lifestyle they wanted," he stated. "It is important how you walk the client through the situation. You don’t want any surprises to pop up.

He added that if the advisor has laid out the various possibilities ahead of time, the client feels ready to face any changes that occur after retirement. 

And if an advisor can show he or she has considered different scenarios as the client approaches retirement, he or she will be able to solidify the relationship. “The client then knows the advisor has taken proactive steps even for the things that neither thought would happen,” Burmeister said.

Advisors also should help clients find purpose in their new lives or they will not be happy in retirement, Taatjes said.

“That piece of retirement is far more important and harder to deal with than the financial side, especially when the client is retiring suddenly," he said. "The client cannot just move away from something. He has to be moving toward something as well. You need to help the client find out how he can still be valuable to society.”

This is especially important in the current situation when people are isolated and retirement cannot include travel and other activities that are normally come with having more free time, Taatjes said.