Marc, at age 59, merged his successful financial planning practice with that of a 40-year-old planner who was affiliated with the same broker/dealer. Marc now enjoys heading up the investment policy committee for the firm and spending more quality time at his new condo in Florida.
Edith, at age 77, is retiring from her financial planning practice and selling it to another respected advisor. “It’s an adjustment,” admits Edith. “I’ve been my clients’ trusted advisor for so long now, but I have so many important things I want to work on.”
Nelson, at age 74, is still going strong within the industry. A planner for 40 years, his business continues to grow through referrals. He has no intention of leaving his financial planning business, but has arranged for his clients to receive ongoing professional financial advice through a continuity plan with his two sons, who are also in the business.
Financial planners work with retirees every day. But when it comes to planning their own retirements, they may be as befuddled as their clients. That’s because the concept of retirement is being reinvented by the 75 million boomers slated to make this transition over the next 18 years. Our parents’ generation typically defined retirement by a single date: the day you stopped earning a paycheck. But the current generation is augmenting that definition drastically, and within our own industry we’re seeing great variations in how retirement is being pursued. To help you achieve your own monetary and personal fulfillment, you should begin to define what retirement means to you, start to gather good data on the process, and start making specific plans now to achieve your unique goals regarding retirement. While taking these proactive steps is particularly important to those advisors who are nearing the traditional retirement age, advisors of every age should take their retirement goals into consideration now as they build their practices.
Retirement for Everyone
First, let’s define how retirement is changing for all, then we’ll discuss specifics for advisors. According to a new study by the American Association of Retired Persons (AARP), retirement today has three phases. Pre-retirement, which occurs between the ages of 50 and 61, is the time to figure out what you want out of the next stages of life. Early retirement, between the ages of 62 and 74, is when Social Security currently goes into effect–at least for some people. Older retirement, age 75 and above, is when failing health tends to be an issue. Although there are various terms for the different stages of retirement, by age 50 an increasing number of us have only lived half of our lives. With every reported health advancement, these retirement phases are occurring later in life. We are disproving the myth that retirement is for old people.
In his book The New Retirementality (Dearborn Financial, 2001), author and consultant Mitch Anthony addresses these changes concerning retirement, and lists six “retiremyths” that he argues should be retired. They are:
- Age 65 is old.
- Being retired means you are not working.
- You have to be over age 62 to do what you really want to do.
- Retirement is an economic act exclusively.
- A life of ease is the ultimate retirement goal.
- You can do this retirement thing all by yourself.
As further evidence of the changing nature of retirement, considers the findings of the Gallup Organization, which has conducted a survey over the past eight years, asking what people expect from retirement. Gallup found that 60% of retirees want to become entrepreneurs or to seek a new job to fulfill their dreams, 10% are seeking a new work-life balance, 15% hope to enjoy a traditional retirement, and the remaining 15% do not want to retire, ever. These retirees seem to be proving that the second half of life is full of opportunity.
We can look at retirement from two perspectives: the personal side and the business side. Each directly affects the other.
The Personal Perspective: Adjusting Your Lifestyle
Retirement takes on new meaning when it’s your own. Financial planners are particularly adept in addressing the monetary issues of their pending retirement, but the lifestyle adjustments present a whole new challenge. Some experts have likened coping with retirement to the turmoil of adolescence. Both adolescents and pre-retirees go through some serious self-reflection. In what’s been dubbed “middlescence” by Ken Dychtwald, psychologist and author of Age Power: How the 21st Century Will be Ruled by the New Old (Putnam, 2000), most boomers can remember their own coming-of-age process and associated turbulence.
Is this turmoil really so surprising? After all, for decades, the majority of us have worked outside the home. The boomers are the first generation of which 75% of women are in the labor force. That’s twice the participation rate of their mothers. Even in the most varied work environments, work is routine. It gives shape and texture to how we use our time. When that structure is gone, it is easy to enter float mode, drifting along and assuming we will figure out what to do. That’s a big–and dangerous–assumption.
Over the years, Steven Covey has taught the importance of identifying one’s life work and then applying time to address that cause. One “Coveyism” is that we spend more time planning a wedding than planning a marriage. A similar concept applies to retirement. We spend more time planning and managing our 30- to 40-year career than planning our 30 or 40 years of retirement. In some respects, retirement planning is a new concept. Our parents’ generation didn’t have this issue because they simply didn’t live that long. The task of planning one’s own retirement can be daunting, however, and some choose to avoid it all together.