The traditional view of retirement has generally been to work as hard as you can during your working years and save as much as possible, to enjoy a life of comfortable leisure after the retirement transition. And although that may seem to be perfectly reasonable on the surface, the reality is that sometimes, careers are more of a (sometimes excruciating) slog rather than a purposeful journey, that even just making it to the retirement transition can be a challenge. In addition, the retirement transition itself can be challenging as well, as the expectation that we’re supposed to know exactly how we’re supposed to lead a fulfilled and rewarding life once it’s time to flip the retirement switch is not always the case in practice. Which, in turn, begs the question: is it really fair to ask someone to “hang in there” with a job that makes them miserable, so they can save up for a future they don’t know how they want to spend anyway?
In our sixteenth episode of “Kitces & Carl”, Michael Kitces and financial advisor communication guru Carl Richards explore different ways advisors can frame their conversations with clients when helping them envision and plan for a retirement they can actually look forward to, how to integrate relevant “what if” scenarios for a client that can help them truly understand the range of options available that they may not have otherwise thought possible, and practical ways to ask questions in a way that probes what clients love to do, what excites them, and what brings them joy – which, in turn, can spark retirement ideas that they will be truly motivated to pursue.
As a starting point, advisors might ask clients how they might go about doing less of what they don’t like to do, and more of what they do like to do (rather than trying to envision a full-stop retirement). And what it might look like to adjust income over time to eventually reach a no-savings and no-withdrawal stage, to reflect a gradual change in work activity (e.g., jobs that might pay less, but that involve activities the client loves more), which can show the client they don’t necessarily have to wait until “retirement” to leave their current job in the first place. Meanwhile, advisors can also simply ask clients what kind of work they would do if they were financially independent and the level of income from their work didn’t matter to begin with, as a probing thought experiment to help clients see past the “traditional” picture of retirement and formulate specific goals that are both meaningful and enjoyable.
The key point, though, is simply that conversations around retirement planning must go past the traditional objective of figuring out how much a client needs to have at a certain age so that they can afford to maintain their current lifestyles, which presumes a sometimes-hard transition away from what might have been meaningful work into a retirement lifestyle they may not really have clarity about anyway. Instead, by examining alternative possibilities leading up to (and through) retirement, advisors can add even more value for their clients… not only by helping them understand their financial picture (in the traditional sense), but also in realizing the wide range of possibilities available to them moving forward!