How to Tell Clients They Can't Retire Yet

Rick Brooks, CFP, CFA; Blankinship & Foster LLC; Solana Beach, Calif.

Part of how we break it to them is our presentation. We list a matrix of potential returns and inflation assumptions, then show the long-run maximum sustainable spending under each condition. The center of the matrix (our core assumptions) should equal the cost of their expected retirement lifestyle. If it does not, then we point out that, under a certain set of assumptions, it does not appear they can achieve the goals they have outlined.

We will then go on to show scenarios under which their goals can be achieved, such as working longer or working part-time, cutting expenses early to save more, or cutting out some of the more aggressive goals (like a second home or toning down their auto replacements). We will also send the client home with the analysis and ask them to come up with a scenario that we should run.

Lauren G. Lindsay, CFP; Personal Financial Advisors LLC; Covington, La.

We use Money Guide Pro which allows us to put the clients’ ideal retirement situation in and then show what modifications need to be made for it to work, side by side.

This has been great, because we can show what would be needed to make the early retirement work: more savings, higher return, working part-time and usually we can come to some kind of solution based on that. I am seeing lots of folks who don’t want to fully retire even when they can, for fear of boredom and lack of routine.

So sometimes it is just letting them leave that job to do something else, or work less, or consult, which makes them happy. I also think we are redefining “early” since I am not seeing too many folks retiring fully much before 65 or 70.

Eve Kaplan, CFP; Kaplan Financial Advisors LLC; Berkeley Heights, N.J.

I’ve walked clients through several scenarios to encourage them to postpone retirement. Here are the steps:

1. Take the client request to retire at 62, for example and run a financial projection. The software I use clearly gives the client a “probability of success” score (Monte Carlo) that takes into account amount of money saved, amount of money needed for retirement, a snapshot of current investment assets, etc.

2. I subsequently run other scenarios (e.g. retire at 63, 64 and 65) to show how each year of postponed retirement adds to the pool of savings and eliminates tapping investment assets by each additional year.

3. The client clearly can see the “ideal” versus “acceptable” (retire later) numbers in visual form.

As the old Chinese adage goes, “one picture is worth a thousand words.” These visual images of “preferred” versus “recommended” retirement help the client to come to terms with postponing retirement.

Kathleen Campbell; Campbell Financial Partners; Ft. Myers, Fla.