Retirement Readiness: Beyond the Numbers

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The word “retirement” is a growing enigma. In fact, the Americans’ Financial Security: Perception and Reality survey conducted by The Pew Charitable Trusts indicates that only 26 percent of Americans view retirement as a period in life when they stop working completely. Twenty-one percent of survey respondents said they are never planning to retire, and 53 percent anticipate doing something else, such as working at a different job. Some will work because they need to and others because they want to.

It’s clear from these results that boomers are redefining what retirement means. In time, we will likely have either a new definition or a new word to describe it. In any case, financial advisers will need to help their clients prepare for this “new” retirement. To do this, you’ll have to start looking beyond the numbers.

Emotional Readiness
While the masses may be unprepared financially, there’s an equally large concern that pre-retirees are unprepared emotionally. As financial advisers, you know these individuals. They’ve saved carefully and certainly have enough money to support their needs in retirement. But they may have no clue as to how to replace the benefits that work can provide to most people. These benefits include some combination of:

  • A sense of purpose
  • Financial reward
  • Status
  • Time management structure
  • Source of social contact

Woe is the person passionate about work who doesn’t attend to this critical dimension of life satisfaction and fulfillment! And that’s just the tip of the iceberg. The replacement of work is just one of many factors to be considered. Others include:

  • Attitude toward retirement
  • Family responsibilities—whether that means caring for an aging parent, the return of adult children or the impact of grandparenting
  • Health perception in different stages of retirement
  • Adaptability: the requirement to change increases rather than decreases with age

Many quit their jobs only to wallow in the muck of having no vision or plan for making the next chapter of their lives a continuation or enhancement of success and satisfaction. Given this, how do you help your clients truly prepare for retirement?

The Role of the Financial Adviser
Although Retirement Options identifies 15 dimensions of retirement success, only 1 dimension deals with financial security. As financial advisers, you’re in a unique situation to help your clients prepare for both the financial and nonfinancial aspects of retirement readiness. This role ranges from “do no harm” to formally coaching clients to prepare for the next life stage (even when it means the client continues to work). Between those two ends of the spectrum, you can, for example:

  • Share resources such as books and websites that focus on all aspects of retirement readiness
  • Offer a seminar on holistic readiness
  • Write about the importance of thinking about retirement in a more comprehensive way than just financially (in letters, newsletter articles, white papers, e-books, etc.)

Be a Role Model
As you see your clients address how to make the next stage of life successful, isn’t it interesting that many of you are tackling this same issue personally? Perhaps the most authentic way to enlighten others and increase awareness about the importance of planning is to apply your recommendations to your own life. Be a good role model by creating your own retirement vision and plan for a fulfilling next chapter of life.

Joni Youngwirth_2014 for web

Joni Youngwirth
Managing Principal of Practice Management
Commonwealth Financial Network
Waltham, Mass.

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