What’s Driving You?
Amy Ouellette, vice president of product at Vestwell, a savings and investment platform, says that clients need to better understand the emotions driving their decisions. When many people left their jobs during the past few years, “they were running away from a lifestyle that no longer worked for them.” Yet before these same people reverse course, she suggests they consider “what are they running to?” Presumably, it’s a job or lifestyle that’s different from what they had before.
Let’s get back to that notion of the “sabbatical” cited by Edelman. Ouellette calls it a “gap year,” which can be a useful time to gear down from a heavy load of responsibilities and ponder future outcomes. This chance to step away and reconnect with your values can take many months to work through and can help you “visualize how you’ll spend your time and see if you can move towards what you really want to do,” says Ouellette. Oftentimes, that may mean a different vocation than you had before.
Jim McDonald, a client of mine who worked three decades at a national telecom company, needed the help of a financial planner to determine whether he could leave a six-figure job and start working as a substance abuse counselor.
Despite taking a sharp pay cut, Jim tells me, “I’ve never been happier. In 31 years, I never talked about my job with my wife after work,” he says. “Now, we talk every night about how my day went.” He adds, “I wouldn’t have had the courage and clarity to make such a big leap if I hadn’t worked through my choices with a financial planner.”
The Halfway Choice
For many clients, the binary path of full-time work or full retirement isn’t ideal. Instead, a shift toward part time may be ideal for people leaving a job or those looking to re-enter the workforce. For those still working but contemplating a change, a “phased retirement” may be ideal. This allows clients to cut back on their hours while keeping some pay and benefits. The pandemic has ushered in a new era of more flexible work arrangements, and employers may be thrilled to hear that your clients can still contribute to the team, perhaps training successors to gradually learn the ropes before they fully retire.
According to a survey completed by consultant Mercer LLC, nearly 40% of large employers now offer some form of phased retirement, up from around 17% before the pandemic. Those workers most likely to be offered a phase-out will be those with specialized or hard-to-replace skills.
For those clients now out of work and looking for a job, it may be helpful to take on projects or contract work, “which enables the employer and employee to do a ‘test drive’ to see if they are a good fit for each other,” says Emanuel. Oftentimes, “this can lead to a more permanent part-time arrangement,” he adds.
Also, people could always take their career and income into their own hands, launching businesses that provide flexible work hours and still-reasonable levels of income. Many are doing just that. The Economic Innovation Group notes that 5.4 million new business applications were filed in 2021, around one million more filings than in 2020.
There is a growing array of websites that connect employers and those seeking short-term projects. LinkedIn, for example, has a new feature that targets self-employed people in fields such as marketing, design, engineering and video editing.
Some advisors seek out retirement coaches to help, through organizations such as the Retirement Coaches Association, which offers the Certified Professional Retirement Coach designation.
The important point is that advisors can play a very powerful role in helping their clients navigate crucial decisions about when to retire and the financial implications of such moves.
David Sterman is a financial advisor and freelance writer in New Paltz, N.Y.