How many times have you seen this happen? You work with a couple — sometimes for decades — helping them make wise decisions about money, send their kids to college and prepare financially for retirement. Finally, that happy day arrives.
You continue to meet with the couple post-retirement, discovering that their nest egg is sufficient to support their needs. But they aren't happy. They miss their old life, and they are starting to drive each other crazy. They're not alone. In fact, “gray divorce” is increasingly common, and depression, especially among men in their 60s and 70s, is on the rise as well.
As more boomers move into the next phase of life, we can be pretty sure that retirement is going to be redefined. Due to increasing life expectancies, individuals may spend nearly as many decades in retirement as they spent in their active working years. As a result, we're already seeing the “rocking chair mentality” being replaced with a desire to continue working.
A 2013 Merrill Lynch study, Americans' Perspectives on New Retirement Realities, found that 68% of those with investable assets greater than $250,000 wanted to continue working for stimulation and satisfaction. The same study showed a 50/50 split between those who wanted to stick with the same type of work they had pursued during their active career years and those who wanted to try something new. Although respondents want to work, they don't want to work as much, so part-time employment is increasingly popular. Only about 5% reported wanting to work full time.
There are many reasons why people may want to keep working. We crave the things that work provides us beyond financial remuneration, including status, opportunities to socialize and a sense of purpose.
And as much as we have a problem with time management during our active career years, we seem to have a reverse time management challenge in retirement. After all, work provides structure. It gives us a place to be, things to do and people to see. When it suddenly stops, and there's nothing to fill the void, it's easy to see why relationship troubles and other issues could enter the picture.
Financial advisers are naturally very involved with clients as they go through the stages of life, so they may be aware of and be able to influence a more holistic retirement. A solid financial foundation is critical, of course, but advisers should also be aware of potential red flags, such as:
• Clients' attitudes toward retirement and their perceptions about aging in general
• The degree to which a client is part of the sandwich generation, caring for or supporting parents or relatives, children and perhaps even grandchildren
• Clients' ability to adapt to change
• Health — both physical and mental
• Whether clients have any hobbies or interests to keep them engaged
Clients may not think about these topics without prompting. The keen adviser who asks the astute question can get clients thinking beyond their portfolios to what they really want to do with the rest of their lives.
It's also key to retaining clients in this tough stage and keeping a practice viable.
You may want to share stories of other clients who adjusted their approach to retirement to achieve real satisfaction. Or, for the truly difficult situation, refer clients to a professional, like a life coach or psychologist.
Financial advisers often find themselves as unprepared as their clients when it comes to the realities of retirement. You gain enormous fulfillment from your work, so why would you want to give it up as long as you are healthy enough to keep going?
Finding a self-identity separate from your role as a financial adviser (a process referred to as “work reorientation”) can help you prepare for the next stage in life — because, at some point, you will have to stop working. And succession planning takes time.
Learning how to help your clients prepare for a successful retirement — both financially and beyond — may just require you to answer some critical retirement questions for yourself first.
Joni Youngwirth is managing principal of practice management at Commonwealth Financial Network.