This point is important because I find many financial professionals don’t put as much value on the soft or mental/emotional side of the equation when compared to the financial or hard side, because they haven’t looked deeply into it. They just assume somehow it will work itself out.
That is until they get there and suddenly realize there’s more to the story than money. I think it’s interesting that within our industry you see arguments for and against the 4% rule and the 60-40 portfolio, for example, but very few debates around the psychology of retirement. In other words, we need more critical thinking from our industry on the topic because it allows us to not only create new ideas, beliefs and behaviors around the transition but also helps us pinpoint the values and virtues we want to live out in retirement. That’s a point I don’t want advisors to miss because there is no single or universal definition of a successful retirement, making it necessary for everyone, including financial professionals to develop their own very personal vision and approach.
At a recent conference, I offered the attendees an opportunity to challenge the status quo of traditional retirement by pondering these questions:
• Why do we still have retirement ages?
• Who does retirement help and hurt?
• What would be different if we didn’t have retirement?
• What harsh truths about it do we as a society prefer to ignore?
• What does it mean to live a good life in retirement?
• What do we lose or give up in order to reach retirement?
• Where does a person’s self-worth come from in retirement?
• By what standards do you judge yourself and how will that change in retirement?
• What is the biggest waste of retirement?
• Does everyone have the same rights in retirement?
While these are just a few of the many questions I have stockpiled for financial and other professionals to consider before retirement, the goal here is to start thinking about factors that go beyond the dollars and cents of retirement.
3. Clients as friends. Research suggests that one of the key factors that plays an important role in the retirement transition is tied to a person’s social network. Now, we all know about the challenges that clients have staying connected to co-workers when they leave the workplace. They have the best intentions of doing so, but those relationships fade because they are no longer connected by work. Advisors face an even bigger hurdle because our business is highly social and we consider many of our clients as friends.
Advisors who are usually very good at calculating things, haven’t adjusted or prepared for the loss of these relationships over time. Similar to other people in the workplace, when there is no longer that essential connector and your client/friends are getting advice and market insights from someone else, your social network can begin to shrink very quickly. Which is why it’s so essential for advisors on the verge of retirement to start thinking more about the relationships that are important to them and how they hope to keep or strengthen them during the transition.
As you can see, the culmination of these factors can make it challenging for advisors to not only make the decision to retire, but to also pull the cord and make it happen. It’s a complex situation with a number of layers and factors to consider, which is why it may make sense to add a retirement coach, or someone trained in the non-financial factors to your stable of professionals helping you make the transition.
Robert Laura is a best-selling author, nationally syndicated columnist, and president of Wealth & Wellness Group. He is a seasoned conference speaker, corporate trainer, and founder of The Certified Professional Retirement Coach Designation which focuses on the non-financial aspects of life after work. He can be reached at [email protected].