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3 Ways Retirees Adjust Their Lives Once They Discover Their Pre-Retirement Assumptions are Mistaken

3 Ways Retirees Adjust Their Lives Once They Discover Their Pre-Retirement Assumptions are Mistaken
October 23
00:03 2018

When we ran the article on retirees discovering retirement isn’t what they thought it was (see “New Fiduciary Role: What Happens When the Retirement Honeymoon is Over?, October 9, 2018), we found it received an enthusiastic response from readers. It also led to two obvious questions. We will address each of these queries over the next two weeks.

No one expects retirement to be anything other than that exciting fun time you see in commercials. Even those annoying (and depressing) pharmaceutical commercials always show seniors in physically demanding activities smiling as if they don’t have a care in the world. That may be true for the TV world, but, more often than not, the exuberance of retirement quickly fizzles into a monotonous rut. Retirees find they’ve gone from punching the clock at work to merely punching the clock on their life.

The October 9th article focused on this realization. Just like marriages last far longer than the honeymoon, so to can retirement bliss continue beyond that initial burst of enthusiasm when you first walk out the door with that gold watch.

How do you do it? How does a retiree find a way to replace what’s missing from their retirement? “The best way to address what is missing for retirees is for them to be proactive about being active,” says Scot Landborg, Senior Wealth Advisor at Sterling Wealth Partners in Tustin, California. “This process requires retirees to venture out of their comfort zone and experiment to find new things as a source of energy and vigor for life that they’re pursuing. My happiest retiree clients are ones that are active. Whether it be taking an art class at the local college, ukulele lessons or spin classes; any of these options allow for personal development and break up the monotony that retirees fear. Additionally, retirees shouldn’t be afraid to do some consulting on the side to help bridge the gap between working full-time and being completely retired. This can allow them to work for as long as they want and to do it on their own terms. I recommend retirees find a meaningful organization to volunteer for or establish a better relationship with their grandkids, as both of these actions pay a high dividend in the fulfillment department.

Like the previous article, we can sort the missing elements into three broad categories. “It’s not typically just one thing that is missing in retirement, but rather a combination of financial constraint, less than average health, and lack of purpose,” says Stephen Heitzmann, CEO of Altruistic Investing LLC, based in Colorado Springs, Colorado. “One client we worked with was struggling with all three of these challenges and found himself in a state of constantly playing ‘whack a mole.’ He would focus solely on reducing debt by limiting monthly expenses, only to find he was gaining weight. He then shifted gears to work on his health but struggled to find purpose in retirement. We have found it’s best to try and remain balanced in addressing whatever is missing in retirement.”

Let’s explore each of these three ways retirees adjust their lives once they discover their pre-retirement assumptions are mistaken.

More important than anything else is the sometimes difficult transition from saver to spender. Retirement is, by definition, a negative cash flow event. That can be a challenge for many. “After a lifetime of savings and without a monthly paycheck for the first time in their lives, many retirees are unnerved by the prospect of drawing down their investment accounts even when that’s what they are supposed to be doing,” says Elizabeth Kelly, Senior Vice President of Operations at United Income in Washington, DC. Instead, they cut back on spending. Research from United Income has shown that spending falls about 2.5% per year in retirement, with the pace of decline increasing significantly from age 80 onward.”

Those already using a fiduciary adviser have a ready-made outlet to address financial issues during retirement. “If uncertainty surrounding outliving their financial resources is ‘what’s missing,’ they will quickly engage the conversation with their financial adviser,” says Paul Zachary Shelton, Jr., portfolio manager with Warwick Shore Advisors, a registered investment adviser located in Orlando, Florida. “Having the assurance from a professional is often what is needed to help answer the ‘what’s missing’ questions for most clients. A thorough financial plan that addresses their needs and concerns provides a blueprint for eliminating any missing items.”

Retirees who don’t have experience working with a financial profession can always tap into their network to identify potential candidates. “Chances are they have friends that have advisors so get some recommendations and interview advisors and take your time,” says Jeffrey Beyer, President of Paladin Retirement Advisors, Newtown, Pennsylvania.

There’s no need to limit yourself to just talking to people, even professional service providers. Heitzmann says, “Reading a book like Financial Peace by Dave Ramsey is a good place to start if you are experiencing financial constraints.”

Sometimes “financial” doesn’t involve “constraints.” Sometimes it involves a way of life. “I’ve been in financial services since 1994 and people no longer pick up their golf watch and swing in the hammock,” Bob Alger, President of ALGER Financial and Branch Manager for Raymond James Financial Services, Inc. in Raleigh, North Carolina. “Many people tell us that they plan to work their stressful full-time job until 62 and then work part time at a job that they enjoy for far less money. We often here clients say that they want to work on Lowe’s or Home Depot in retirement. The problem is that there aren’t 10K jobs available at these places. The other issue is that often clients aren’t in control of when they retire. Many are forced at with corporate restructuring or take a package that they are afraid they won’t see again.”

Health issues fall into two categories. The first is simply maintenance. Heitzmann says, “Joining a growing sport community (pickle ball comes to mind) or designing a trendy garage gym can help with health.” It also offers the advantage of allowing the retiree to maintain a social presence.

Not all health issues and simple. Some are more complicated. “If a recent diagnosis with a terminal disease is the issue, assurance that they have planned for this over the years will alleviate the financial fears and allow the client to focusing on healing,” says Shelton. “This is something that I have done for a client that was diagnosed with cancer during retirement. For professional athletes much of the same medicine can be given, planning for the future. This often requires additional education and training in an area of interest prior to retirement.”

Here’s the real hurdle may retirees find higher than they expected, no matter what retirement lifestyle they select. “How retirees choose to spend their newly found free time obviously varies by individual,” says Kelly. “Our research has found that some retirees choose to watch more television: average per-day viewing among retirees was a full two hours higher than non-retirees.”

Of course, retiring to a life of a couch potato probably grows tiring fast. After a lifetime of mission statements, it becomes evident something is missing. “What’s missing is human connection and a sense of purpose and worth,” says Eric D. Brotman, President & Managing Principal for Brotman Financial Group, Inc. in Lutherville, Maryland. “In the U.S., we tend to equate who we are with what we do. Someone who has practiced dentistry for 40 years can’t suddenly go from 40-50 hours a week with patients to watching Oprah and playing shuffleboard without being incredibly bored and unfulfilled. It isn’t necessary to have something to do for money, but it is critical to have something to do that provides a reason to get out of bed and look forward to the day. That can be volunteerism, family, consulting, or starting a new business venture, but it can’t be crossword puzzles and early-bird specials. People who don’t have a reason to get out of bed eventually don’t, and their health and happiness suffer dramatically as a result.”

We may make light of watching television, but other “retirement” activities can also grow stale. “The ‘missing piece’ in retirement is what people are going to do with their free time,” says Alger. “It only takes 2-3 months before people realize they can’t play golf every day. We have found many people who retire and move to their dream retirement destination, only to find a new job 2 years later and no longer get to enjoy their location. To avoid this, we recommend that people get active with a charity, social club, or other community-based organization well before retirement. This way they already have that special something that they can spend more time doing after their career is over. We don’t want people to give up their identity just because they no longer work for their employer.”

Ryan Fisher, President of White Coat Wealth Management in Fort Wayne, Indiana, agrees. He says, “When they officially retire, there is a gap like many other professions. I mean, after all, every day is now Saturday. They must fill the void with other channels, which usually involve non-profit/charitable work. For example, one dentist that is retired from private practice, volunteers on mission trips and local dental healthcare clinics. Usually there is a shift back to family and focus not on their children but on the grandkids.”

Rest assured, although a retiree might think this “lack of purpose” represents a personal fault, it doesn’t. Many go through this same process. “After a period of time trying different things (more vacation, visit kids or grandkids, move), they sit down and figure out what they really want to do,” says Thomas Kavanagh, a Vice President at Lenox Wealth Advisors in New York City. “They talk with family, friends, co-workers who retired before them, and often their financial advisers. Hopefully they get to this stage before they commit financially or personally to things that don’t align with what makes them happy.”

One way to overcome this lack of purpose is to treat retirement itself as a mission. “Retirement is not just the end of someone’s career, it is also the beginning of a new stage of life ­– one that could last several decades,” says Kelley Palmer, Director, of Retirement Optimization at John Hancock Retirement Plan Services in Boston, Massachusetts. “Many people have a vision of what day 1 in retirement will look like, whether it be travel, moving to a new community, volunteering, or joining that country club. But after that honeymoon phase is over and folks begin to settle in, there is sometimes a void people feel. To fill that void, people need a purpose, a community, and a social network.”

In retirement, purpose all comes down to two words: “Get Involved.” “With the clients I’ve worked with, a sense of purpose has been the missing piece for those who have moved on to a ‘traditional’ retirement,” says Patrick King, founder of Transformative Financial in Atlanta, Georgia. “Rather than return to the workforce, mentoring or volunteering in either a business or charitable setting has helped recent retirees stay in the game while giving back. Whether it’s volunteering at their church, mentoring a young person or volunteering for an organization such as CEO Netweavers or Vistage, staying involved gives them an outlet to put their wisdom to use.”

This purpose doesn’t have to be simply passive activity. It can be more active, too, depending on the individual. “Some have started charities and become actively involved in them,” says Kavanagh. “Others have passed on their knowledge by becoming teachers, mentors or consultants. The critical factor is to keep yourself invested in something that’s important to you.”

Heitzmann says, “Figuring out what excites you on a consistent basis and working to get better at it promotes a vigorous purpose in life.”

Retirement is forever. You may as well as have fun with it.

Christopher Carosa is a keynote speaker, journalist, and the author of  401(k) Fiduciary SolutionsHey! What’s My Number? How to Improve the Odds You Will Retire in ComfortFrom Cradle to Retirement: The Child IRA, and several other books on innovative retirement solutions, practical business tips, and the history of the wonderful Western New York region. Follow him on TwitterFacebook, and LinkedIn.

Mr. Carosa is available for keynote speaking engagements, especially in venues located in the Northeast, MidAtantic and Midwestern regions of the United States and in the Toronto region of Canada.

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Christopher Carosa, CTFA

Christopher Carosa, CTFA

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