The Big Retirement Question Many Advisors Overlook

What You Need to Know

What does your retiring client want to do with the time once spent at work, and how will they pay for those activities?

Many Americans approaching retirement work with a financial professional to ensure effective planning with respect to their savings and investments, but that doesn’t mean they are fully preparing themselves for life after work.

In fact, according to a survey conducted by Lincoln Financial, far too few late-career workers are spending the time needed to actually map out and envision what retirement will look like from a behavioral and budgetary perspective. How will they actually spend the time they formerly spent at work? How will the effort to enjoy one’s passions and interests across different phases of life align with their actual retirement budget?

As John Kennedy, Lincoln’s chief distribution and brand officer, recently told ThinkAdvisor, these are key questions that advisors should be bringing to their late-career clients’ attention. Yes, the dollars and cents of retirement are incredibly important, he said, but they are only means to an end.

“Advisors owe it to their clients to help them create a real lifestyle — complete with time and funds to explore these passions and pastimes — and to ensure that loved ones can be part of this plan,” Kennedy said. “More energy must be put toward a plan for these activities.”

What Lincoln’s Survey Found

As Kennedy explained, the survey data shows that 87% of individuals in their 50s and 60s who work with a financial professional have discussed an investment strategy for retirement. However, only 53% have discussed a budget for their favorite activities.

At the same time, nearly half (48%) of individuals aged 50 and over who work with a financial professional but have not discussed budgeting for their pastimes in retirement have grown more worried about their finances in recent years.

“Those approaching retirement today have no plans to slow down, and that’s what so many are overlooking in the planning process,” Kennedy said. “We need to help the next generation of retirees ensure their pastimes last a lifetime, and this research is a clear indication that there needs to be more of an emphasis on planning to do the things that you love, especially when you finally have time for them after your working years.”

Pursuing Pastimes in Retirement

As Kennedy emphasized, pre-retirees and retirees have a natural desire to spend retirement pursuing their passions and pastimes. These range from traveling, volunteering and experiencing the arts to exploring outdoor activities and simply socializing with friends and family.

A Personal Perspective

Reflecting further on the research results, Kennedy said he can relate to a lot of the uncertainty and the optimism expressed by late-career workers, given that he is “not so far away from turning 60″ himself.

“The retirement planning tagline we came up with recently is, ‘Make your pastimes last a lifetime,’” Kennedy observed. “When we were doing this research, that tagline started to sink in on a personal level. I’m 57, and I’m thinking about what I want to do when the time comes for me to choose to retire — or when they ask me to hang it up.”

The effort is equal parts exciting and daunting, Kennedy observed, and that is true even though he is in a comparatively secure financial position.

“The question is only natural: Will I have enough money in retirement to allow me to do all the things I want to do?” Kennedy observed. “When you think about things like sequence of returns risk and longevity risk, it’s not easy to answer that question. That’s why working with a financial professional is so important.”