The Great, Unanswered Retirement QuestionAdvisor Perspectives
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You’re a financial adviser, not a retirement lifestyle coach. People seek your expertise to solve their financial challenges. You routinely provide valuable retirement planning advice about topics such as how to pay down debt, reduce taxes, invest money, manage retirement income sources, and demystify estate planning matters.
But there is an overarching retirement planning question that goes unanswered or is never brought up during an adviser-client meeting.
The great, unanswered question
Financial planning technology has advanced our profession significantly over the past couple of decades. Advisors have easy access to professional tools to help their clients answer the most important financial question of their lifetimes: How do I ensure that I don’t run out of money?
But the question that is often ignored or answered superficially deals with your personal identity in retirement: What am I going to be after I no longer do what I used to do for a living?
Those contemplating their retirement years think about this question, but few actually seek a definitive answer beyond doing activities.
I am what I do
Personal character is frequently associated with work identity. When I listen to career-focused people introduce themselves and explain who they are, they invariably offer up their job title or an explanation of what they do. After years of being what they do for a living, they anticipate their inevitable retirement date with no clue what their new purpose will be after they separate from their work environment and related social circles. Consequently, a personal identity crisis begins once work identity is abandoned without a sufficient substitute to replace it.
A retirement lifestyle defined only by what one does (say, replacing work responsibilities with leisure activities), without including a redefined sense of purpose, does not fully answer the “what will I be, now that I’m not” question.
Be, do, have
When I was an active financial planner, I asked clients this question: “What do you want to be, do, and have when you retire?”
Answers varied, but mostly clients responded like this: “I want to be retired before ____ age; I want to do things like play golf, hang with friends, and travel; and I want to have enough money to remain financially independent for my retired lifetime.”
Aside from the financial aspects of making the financial independence goal happen, I always felt like my clients needed additional help in providing more thoughtful answers to my questions about their retirement lifestyle goals. Specifically, they needed to address what would be their new purpose in all areas of their lives after employment ended or was altered.
Most people are surprised to learn there are seven life facets in retirement to consider.
Life facet allocation
As a planning tool to help clients provide more thoughtful answers to the “be, do, and have” lifestyle questions, I created an exercise that includes a pie chart similar to an asset allocation diagram. Instead of labeling the slices of the pie with growth, income and cash assets, the model life facet allocation pie has seven areas that make up a retirement lifestyle.
Examining each slice, an advisor can ask the client this: What will you be (new purpose) to the people and situations in each area of your life? Then ask this: What will you do (tasks) to affirm your purpose or identity for each facet? Finally, ask this: What will you have (life experiences) as a result? Worksheets for this simple but effective retirement lifestyle planning exercise are included in my e-book called, You Vision. It can be downloaded for free here.
Read the full article here by Jim Collier, Advisor Perspectives