I’ve heard the war stories many times. Whether it was boredom, addiction, divorce, starting a business, aging parents or spendthrift adult children, it’s not uncommon to hear about clients who fail at retirement. Unfortunately, much of these discussions center around symptoms rather than root causes.
As a result, advisors need to take steps toward helping clients become aware of the factors that contribute to a slow or failed transition into retirement. I have found four root causes associated with a wide variety of retirement failures. They are:
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Vague assumptions
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Role ambivalence
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Talent or skill reversal
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Poor communication
Vague Assumptions
One of my favorite retirement statistics suggests that 70 percent of pre-retirees think that life will be better in retirement, but only 40 percent of actual retirees find that it is. The reason for this is because a growing number of people carry vague ideas and assumptions with them into retirement. They think everything will be fine and easy to figure out. But that’s not how it works.
Retirees quickly figure out that there is nothing easy or automatic about retirement. It doesn’t just magically unfold for them. They realize they have to develop a new identity, be flexible and find new ways to connect with family and friends. They have to take some initiative in order to stay active and out of the refrigerator, and keep themselves busy so that their thoughts don’t wander and turn into shopping impulses or sarcastic rants on politics.
The impact that these vague assumptions can have on a client’s retirement often show up in plans to volunteer and/or work part time. Many retirees have an ideal schedule in mind, however, it doesn’t always match up with an employer’s needs. In other words, there are very few jobs available from 10:00 a.m.–1:00 p.m., three days a week, with no weekends and summers off. Not to mention the pay is not commensurate with the clients work experience, education or skills. Volunteering can follow a similar path. Some retirees may feel compelled to help out or be a part of a local non-profit but quickly find the work isn’t as fulfilling or impactful as they hoped.