Many retirees mistakenly believe that attaining financial security will assure them a fulfilling retirement. That’s where some financial advisors are proactively stepping in—helping clients home in on the nonfinancial side of the equation.
This includes helping couples determine what could make their retirement meaningful and encouraging each partner to discuss his or her expectations well before either leaves the workforce.
“I see a lot of people who are financially successful in retirement, but they’re not satisfied and happy,” says Beau Henderson, chief executive of RichLife Advisors in Gainesville, Ga. “A satisfying retirement does not necessarily equal a spreadsheet that works mathematically,” he says.
Advisors say they are trying to get clients to think in advance about how they want retirement to look and how they can make the most of their time after leaving the workforce. These nonfinancial types of conversations could become even more important as retirement plans get rejiggered amid the pandemic. Notably, 35% of the 2,320 Americans polled by Northwestern Mutual and Harris Poll in March say they have either moved up or pushed back their target retirement age. Almost a quarter said they plan to retire later than previously expected, and 11% said they plan to retire earlier, according to the study.
Many people become bored, depressed, or feel life is less meaningful in retirement, so advisors say it’s especially important that clients be able to frame the next stage of their life in more concrete terms. As a conversation starter, Howard Lutz, senior vice president at Intercontinental Wealth Advisors in San Antonio, encourages clients to articulate why they want to travel, why they want a slower pace, or why they want to spend more time with their children and grandchildren, for example. “The further we can dig in past the initial abstract idea of retirement, the better,” he says.
WMBC, a registered investment advisor firm in Irvine, Calif., has developed a proprietary planning strategy, using a questionnaire developed by experts on well-being, data analysts, economists, and financial planners. The goal of this annual 20-question exercise is to understand clients’ overall well-being alongside their financial needs.
Asset management can be accomplished by computers, but advisors can help clients drill down on what’s meaningful to them in retirement, says David Coles, the firm’s president. “Money is supposed to support our nonfinancial pursuits,” he says.
Dennis Stearns, president of Stearns Financial Group in Greensboro, N.C., asks clients to fill out a short questionnaire to get them thinking about the retirement process and conversations they should be having ahead of time. Then, in follow-up meetings, he probes deeper, asking questions such as “What do you expect your first week of retirement will look like, besides eating breakfast, lunch, and dinner?” and “What do you see yourself doing as a couple and on your own through the first full year of your retirement?”
He finds this process helpful in learning whether spouses or partners have differing pictures of retirement, such as when one expects to relax at home while the other has grandiose travel plans. These conversations are particularly important given the prevalence of gray divorce, the phenomenon of couples splitting up after age 50. According to U.S. Census Bureau data, divorce rates were highest—roughly 43%—among men and women ages 55 to 64.
“It can mean the difference between a retirement being successful and a marriage being successful,” says Henderson of RichLife Advisors. “There’s high stakes here.”
Although retirement discussions tend to take place more frequently as the milestone nears, initial conversations should take place much earlier, Lutz says.
He offers the example of a couple in their late 40s who were expecting to live off family inheritances. In the course of planning, the couple started talking about their respective visions for retirement. It came out that the wife had an ambitious plan to travel around the world, which she planned to fund by selling a family-owned ranch she expected to inherit. The husband, however, was hoping to spend his retirement relaxing—on that very ranch. Luckily, these discussions took place before any real rift developed, but for Lutz it underscores the importance of having these conversations as early as possible.
There can be additional strain on a relationship when small-business owners who have poured much of their life into work retire and have nothing to do. All of a sudden, they are spending much more time around the house, and the spouse may feel intruded upon. Sam Brownell, founder of Stratus Wealth Advisors in Kensington, Md., tries to head off potential issues by asking business owners directly whether they’ve discussed what retirement will mean for their relationship. “I like to ask them, ‘What do you think your spouse will think when you sell the business and now you don’t have a whole lot to do?’” he says. “Just to have them think in someone else’s shoes can be very helpful.”
He then facilitates a meeting so both spouses can voice their feelings and concerns. He tries to ensure both get equal air time and encourages them to think about the things they like to do individually. “So much of planning for retirement requires thinking as a couple, but a big part of retirement is how you define yourself as individuals,” he says.