Lee Iacocca, for example, has not spent his retirement years waxing a sailboat and sipping ice tea since leaving his role as CEO of Chrysler in 1992. Since then, he's focused on philanthropic and entrepreneurial pursuits--and stayed in public view through books and speeches. The Iacocca Foundation awards grants to researchers working on diabetes; he started it after his wife died of the disease and continues to raise money for it through both fund raising and profit-making enterprises.
On the business side, he's devoted considerable energy to the development of electric vehicles--first an electric bike, then cars--with mixed bottom-line results. He's described the working on the start up of the electric bike venture as harder than his last two years at Chrysler, but he's gained greater satisfaction doing business in a direct, more immediate way that he never could as head of a major manufacturer. "I've had my 50 years of building, and quality problems and the manufacturing and assembly line, and a zillion purchasing buyers, and all the unions. I've had enough of that," Iacocca told the Los Angeles Business Journal.
For example, less than an hour after meeting a new supplier for the first time, Iacocca was ready to cut a deal--without the corporate committees, board of directors, or shareholder discussions that followed him at Chrysler. For him, retirement also meant conducting an entrepreneurial life as a small-business owner, something he never did in his pre-retirement years. From an advanced planning team perspective, Iacocca's mix of philanthropic activities, profit-making business ventures and the management of his personal portfolio, clearly represent a very active retirement life that requires analysis, projections, and modeling--not just creating a lifetime income stream.
It's Not the Money
The findings of The New Retirement Survey, conducted for Merrill Lynch by Harris Interactive in collaboration with Age Wave in 2005, about retirement attitudes among a broad spectrum of Americans offer some surprising insights into the importance of creating the appropriate retirement "ecology" to achieve happiness. For those age 60 to 70, for example, the three most important reasons to work during retirement have nothing to do with money: to keep mentally active, to keep physically active, and to keep connected with others. Also, having a retirement career seems to drive a positive retirement experience. Those who work part-time on their own terms find the retirement better than they expected, and are more satisfied than either those not working or those working full-time.
For those planning on working during retirement, most want to pursue a different kind of work experience, such as Lee Iacocca. Of this group, the majority has taken some steps to prepare a new career by talking with others, researching opportunities, attending training classes, examining the financial issues, or other activities. Becoming a consultant is the most popular choice for 60-70 year olds.
Other key findings include:
- Having a "retirement career" is part of an ideal retirement scenario for a majority of interviewees.
- Approximately half who plan on working expect they'll never stop completely.
The ideal form of working during retirement is alternating periods of work and leisure, which aligns with those seeking a consulting career or similar project-based employment. Sharing and passing on knowledge ranked high on the preferences of boomers.
Keeping Middle-Class Values
Your advanced planning clients may have considerable assets but their attitudes toward retirement may more closely resemble middle-class retirees, especially at a time when so many portfolios have shrunk. Retirement income and expenses are still a concern of high-net-worth individuals according to several studies released in the last years. Although a $10 million retirement might satisfy the requirements for most people, if that portfolio stood at $15 million a year earlier, the emotional impact of diminished income is real for those who expected more. If they already had some concern about the cost of healthcare even if they could afford medical coverage and long-term-care coverage, the recent economic decline can only intensify those concerns.
If your clients started out in life in a middle-class family, they're more likely to retain those values into their more affluent years, according to the anecdotal observations of advisors and studies by Prince & Associates, Inc. A $40-million client of Bedda D'Angelo, of Fiduciary Solutions in Durham, North Carolina, has lived in the same modest neighborhood for many years and drives an old Mercedes.
If concerns about income and expenses represent two aspects of the planning mix, then the client's attitude toward retirement--as Ageless Explorer, Comfortably Content, or some combination--regulates the direction of any solutions (see sidebar for definitions). When social and class conventions--and the aging process--no longer restrain possible lifestyles, more varied, customized retirement planning is required.
The transition from pre-retiree stage with a focus on career and accumulation of assets to the retirement stage with a redefined self in terms of career and finances can be bumpy for some. Someone like Iacocca spent his executive years calculating risks vs. rewards for the companies and for himself. When he starts a new company during his retirement such as Olivio to distribute olive oil products--and then donates all profits to his diabetes foundation, he's satisfying both his entrepreneurial instincts and his emotional need to contribute to the greater good.
It's this personal blend of new emotional and career needs that advanced planning teams need to understand before creating any lasting retirement plans for affluent clients.