‘What Do You Do?’ the Hidden Impact of Retirement on Clients
FOR FINANCIAL PROFESSIONALS
When we think of retirement, our collective imagination tends to paint a rather idyllic picture – travel to tranquil beaches, endless hours hitting the links, or perhaps spontaneous road trips.
For many of us still in the workforce, this lifestyle might sound like a dream come true. Indeed, the initial sense of peace many retirees feel when no longer beholden to early alarm clocks or punishing meeting schedules can be immensely satisfying.
The trouble is, that sense of satisfaction is often fleeting, and can give way to a distinct sense of unease and discontent.
One of my clients, a recently retired senior human resources executive, told me about her newfound frustration on exiting the corporate world. Whereas she once controlled a million-pound company budget and oversaw dozens of staff, she now feels she can't even get a plumber to show up on time.
It got me thinking: how many of our clients are battling the same frustrations? And how can we as financial planners help them navigate this transition?
As it turns out, my client is not alone.
The Holmes-Rahe Stress Inventory, based on the work of psychiatrists Thomas Holmes and Richard Rahe, ranks retirement from work as number 10 on a list of the 43 most stressful life events.
When you think about this, it makes perfect sense. Often when we meet someone new, one of the first questions they ask is: “What do you do?” The implicit question here is: "What do you do for living?"
Our jobs have become much more than a way of generating income; they are often tightly interwoven with our sense of identity and can represent a source of pride, admiration and cachet.
This is especially true of certain roles that seemingly require, and celebrate, total immersion.
Among the retirees that Canadian sociologist Michelle Pannor Silver interviewed for her book "Retirement and its Discontents" were a number of former physicians and chief executives, whose career successes had often come at the expense of family life and self-care.
Suddenly faced with the prospect of unlimited leisure time and the relinquishment of authority, many described inner turmoil about their sense of purpose and self-worth.
Embracing the ‘second act’
When we think about planning for retirement, so much of the narrative is consumed by technical pension queries, investment strategies for income withdrawal and estate planning.
Yet while these are undoubtedly important, financial planners are in a unique position to forge deeper relationships with their clients by helping them navigate a potentially unforeseen challenge: the psychological impact of their exit from the workforce.
In recent years, we have seen the emergence of the term ‘financial life planning’ to describe a philosophy that helps clients discover and articulate their most essential goals in life.
Shifting the immediate priority from stale conversations around asset allocation and returns, financial life planners instead encourage a deeper dialogue around the client’s individual personality traits and their prevailing attitudes toward money.
By uncovering these, we can better help our clients to view money as a means of creating the life they want for themselves, rather than a mere means to an end.
At the core of financial life planning is the presentation of the right questions: often open-ended and hypothetical questions that empower the client to paint a vivid picture of what, to them, constitutes a purposeful, meaningful and fulfilling life.
They might not even want to retire – so perhaps start by asking them to simply describe an enjoyable life in their 60s and beyond, rather than identifying arbitrary financial milestones.
As you see their eyes light up, try to avoid the temptation to jump in and begin recommending the requisite products to generate retirement income. You might learn a thing or two about your client that will reshape your view of their financial picture and what’s needed.
Once you've ensured your client is comfortable with the process, and understands the overarching aim of your questions, you can then begin to ask more probing hypothetical questions.
These are likely to be geared around what your clients might do differently if they had unlimited financial resources, or if they discovered their days were numbered. Who, and what, would they prioritise? How would they live their lives? What would they look back on as a missed opportunity?
These hypotheticals provide a window into your clients’ deep-seated desires.
This learning process will empower you to align clients’ passions and finances in meaningful yet realistic ways.
Whether it’s earmarking money for continuing education or international travel, you can help them explore aspects of their identity that may have been subdued during their frenetic working lives.
If it’s their work that provides them meaning – as is the case with many that work in medical, academic or non-profit fields – then perhaps discuss ways that they can remain engaged with their profession in retirement (for example through mentoring, attending industry conferences, writing thought leadership articles and more).
Making more of an impact
In some instances where health allows, it might even make sense for a client approaching retirement to remain employed part-time.
Given that UK workers are no longer forced to retire at age 65, some are subsequently embracing 'semi-retirement', whether it’s to reduce financial strain, maintain a sense of structure, or to remain intellectually stimulated.
Planning activities in retirement can also guard against a lack of human interaction. Many newly retired individuals unexpectedly find themselves feeling a bit lonely when they’re no longer privy to those water cooler conversations or daily lunch meetings that used to take up their time.
You could also encourage clients to arrange regular meet-ups with friends, or help them identify relevant community associations in their local area. This is especially important when you consider the threat loneliness can pose to one’s mortality: research suggests social isolation is as detrimental to our health as smoking 15 cigarettes a day.
Thanks to advances in healthcare, and enhanced awareness about optimal lifestyle choices, we are now living longer than ever.
Retirement can now last for 30 years or more. As financial planners, we are already focused on helping our clients accumulate an adequate nest egg.
But we have the opportunity to make an additional impact. We can do this by preparing them for truly golden years that place an equal emphasis on happiness, purpose, health and legacy, not just the size of their pension pot.
Amyr Rocha Lima, CFP® is a financial planner who specialises in working with successful professionals age 50+ to help them reduce taxes, invest smarter and retire on their terms.
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