Doubt shows up in retirement in a number of ways. First, with clients needing to believe they can actually afford to retire. This is evident in survey after survey which reflects increasing pessimism about one’s ability to stop working. Whether they doubt their ability to retire because they feel behind in their retirement savings, because of rising health-care costs, or a declining ability to do their job, convincing people they have enough to retire is a challenging task.
Doubt also shows up when it comes time for clients to start dipping into their retirement savings. So many people have been programmed to save and sacrifice, that they have trouble altering their mindset to start living the life that they deserve. This is the most prevalent form of doubt because people have this voice in the back of their head constantly saying don’t do that, don’t touch that money… you’ll run out of money, have to go back to work, or be a burden on family.
That makes it essential for advisors to have strategies to help clients recognize and overcome the doubts that can show up in retirement. One way to do this is by telling clients that there are always two answers to every financial question: A financial answer and a personal answer.
By simply reframing the question like this, advisors expose clients to new thoughts and ideas, allowing them to see different perspectives on the situation instead of one limiting factor. For example, we’ve all heard the question, “Should I pay off my mortgage or invest the money?” One could argue that it makes sense to invest the money into the market rather than paying off a mortgage right now because home loan rates are so low and markets have performed well in recent years.
Why pay off a 4 percent mortgage loan when markets are turning in double-digits returns, right?
However, if a client hates debt and making monthly payments, the decision to invest the funds rather than pay it off may cause internal conflict. From a client’s well-being perspective, less stress may be more valuable than a few extra dollars in their pocket.
Another way to adjust a client’s mindset and help them overcome doubt and fear is to use client stories that can jolt their thoughts and feelings. Oftentimes, that means talking about clients that have passed away.
Mortality isn’t the most popular retirement theme, but it can be used in a way to help clients focus more on what they have and can do right now instead of postponing it and assuming it will be available or possible later on.
I used this strategy with my client who was worried about buying his dream home. After we talked numbers for a minute, I told him about a client who retired at age 62 and lived pretty frugally. Together, we played golf a couple times a year during which we would talk about life. He would say how he planned to build a pole barn, visit Australia, and maybe even start heading down to Florida to escape the cold and to visit family. He put them all off for six years and died at 68. A simple check-up revealed that cancer had ravaged his body and he was gone in less than three months.
Stories like these cause clients to stop and reflect and turn the fear of not using their assets into a fear of running out of time and living a life they deserve.