What do you think of our site upgrade?
Hosting an industry conference? Ask us about including it in this ticker?

New Fiduciary Role: What Happens When the Retirement Honeymoon is Over?

New Fiduciary Role: What Happens When the Retirement Honeymoon is Over?
October 09
00:05 2018

We are in the midst of a changing definition of retirement. No longer does retirement evoke images of gently rocking on the front porch, waving at the neighborhood boys as they speed by on their bikes during the day, then yelling at them to get off your lawn at night. Is it any surprise that the active generation – the baby boomers – have rejected the quiet life of traditional retirement?

That is, they reject this long-held view of retirement once they have experienced actual retirement. For many, the old norms continue to frame expectations. And that can lead to a problem. “People dream about the future. Their future,” says Stephen Heitzmann, CEO of Altruistic Investing LLC, based in Colorado Springs, Colorado. “It’s part of who we are. We consider decisions made in the present, and project into the future how our life will be impacted by them. Do I go to college? What degree should I pick? What will retirement look like for me? All normal questions. All good questions. For some, what they envision retirement looking like is not what it ends up being.”

How quickly do people realize their original perception of retirement isn’t what they’re experiencing? “Very quickly,” says Eric D. Brotman, President & Managing Principal for Brotman Financial Group, Inc. in Lutherville, Maryland. “Too many people view retirement as the end to something rather than as a beginning.”

Think about it. The financial news media and the investment industry constantly bombards employees with reminders to save for retirement. It’s probably the most recognized financial goal people have. Could it be, then, that society has built up such an aura around retirement that the anticipation exceeds the actual event?

“Retirement can be very similar to a sugar rush,” says Joseph Conroy of the Synergy Financial Group in Towson, Maryland. “In the beginning people are very excited and there is a sense of euphoria. Then, after just a few months, there is this crash where people start to settle into their new routines. This can be a volatile time in one’s life because people are left to figure out what it is that brings them happiness. It seems like an easy problem to solve, but there are many layers to it.”

People spend their entire career working in a system that lays out their priorities, guides their actions, and provides clear, measurable goals. Retirement means freedom, but it also means leaving that system and the comfort of certainty it has provided. “Many retirees experience a lack of purpose without a fulfilling job while others simply do not have the savings or good health to pursue the dream they once held,” says Heitzmann. “What’s ‘missing’,” he says, “usually falls into these three buckets: Finances, health, purpose.”


We’ve heard this all before. “Things just aren’t the same without pensions to rely on,” goes the common complaint. Notwithstanding the fact that the Golden Age of the Pension Plan benefited far fewer people than today’s 401k plans benefit, the perceived lack of steady and reliable retirement income creates an anxiety many feel didn’t exist for those who received defined benefits. “Retirement doesn’t look like it used to,” says Bob Alger, President of ALGER Financial and Branch Manager for Raymond James Financial Services, Inc. in Raleigh, North Carolina. “Without guaranteed pensions, people have to live off of their savings. Because of market uncertainty, unclear withdrawal rates, and increasing health care costs, retirement is much harder to do today than in the past.”

As we begin to see data showing the real financial squeeze some suffer in retirement, there’s a growing expectation that “retired” no longer means “not working.” “Many retirees experience rich and fulfilling retirements,” says Elizabeth Kelly, Senior Vice President of Operations at United Income in Washington, DC. “But some retirees miss having a regular paycheck, and in some cases, find themselves in worse financial shape than they might have expected. For example, only 22% of pre-retirees expect to be worse off financially in retirement, while 35% of current retirees report actually being worse-off (NPR, 2011). Other retirees miss the routine provided by their prior jobs. The vast majority of pre-retirees (79%) plan to work part-time in retirement, but only 34% of retirees end up holding a part-time job (EBRI, 2018).”

It doesn’t take much time before retirees realize their initial financial expectations fail to match their new reality. “Generally, they realize about 1 year in that they had no idea how much they would be spending in retirement and that their budget was totally unrealistic,” says Jerry Lynch, President/Owner of JFL Total Wealth Management, LLC in Boonton New Jersey. “They used the ratios (70-80% of current income or reasonable income), did budgets and wish lists. Until they are ‘fully retired’ they really do not know if it is realistic of not.  I have had people making $300k per year thinking that they can live on $100k a year. Before retirement, they created ‘a budget’ which worked. After retirement, they discovered it was simply not reasonable.”

Making matters worse is growing cynicism towards the advice industry. This might be a result of greater awareness of the differing financial services business models thanks to the publicity generated by the DOL’s now vacated Fiduciary Rule. “I think one thing that is missing in retirement is a certain level of trust in their advisers,” says Jeffrey Beyer, President of Paladin Retirement Advisors, Newtown, Pennsylvania. “The DOL ruling was a step in the right direction to broaden the net on fiduciary standards within the industry, but that unraveled. Do clients have an adviser who is like a butcher who just sells meat? It doesn’t matter what is best for you, you’re walking out of there with meat. Or do they have a dietitian as their adviser who does blood tests and analyses to come up with an optimized game plan that is custom tailored to that individual. The problem is that all the butchers out there are telling their clients that they are dietitians and that’s just not the case.”

This makes it more difficult to seek advice on critical financial questions. These are questions many have. They are questions financial professionals are well positioned to answer. “People can feel unprepared to develop drawdown strategies – ‘Will I need a part-time job?’ ‘What money do I spend first?’ ‘How do I optimize social security?’ ‘What are the tax implications?’ etc,” says Kelley Palmer, Director, of Retirement Optimization at John Hancock Retirement Plan Services in Boston, Massachusetts.


Health issues – whether the retiree’s own health or the health of a loved one – can often shatter a retirement dream. These can quickly lead to a stark realization. “Unless the individual has prepared extremely well by working with a financial adviser and building a pre- and post-retirement plan, this realization comes a few days before the cake is cut at the retirement party,” says Paul Zachary Shelton, Jr., portfolio manager with Warwick Shore Advisors, a registered investment adviser located in Orlando, Florida. “I was working with a former colleague from a previous employer that retired in the last month. A pending surgical procedure and a downshift in income opened her eyes to the stark reality of not having enough resources for medical and living expenses. For other clients, the realization of retirement arrives whenever a significant life event occurs such as death of a spouse, severe illness, or a global economic slowdown such as the ‘great recession.’ The timing of the worry is the same for many professional athletes as well. Many will not have the health concern immediately. The significant shift in income and status, however, creates a huge cultural shock as their playing days fade in to the past.”

Sometimes the shock occurs later on when unexpected health issues emerge. The tendency to speak only of the financial matters regarding retirement causes us to underestimate the impact of non-financial issues. Palmer says, “The biggest misperception for most entering retirement is a social one, not financial. As an industry we have focused on the financial aspect almost to a fault – but many struggle with the questions of ‘what do I do,’ ‘who do I do it with,’ and ‘where do I do it.’ And often the answers to these questions transform as one progresses in retirement and family, health, and financial situations change.”


On the whole, however, actuarial tables suggest health doesn’t become an issue for many until decades after retirement. Though this may sound good, it can lead to a more serious problem. “Retirement has changed mainly because life expectancy has improved,” says Ryan Fisher, President of White Coat Wealth Management in Fort Wayne, Indiana. “This alone gives retirees 30 years on average to do more in retirement, compared to the historical landscape of 10-15 years. I work closely with doctors and the main item missing is their inherent identity. Medicine is engraved in their lifestyle and usually they eat, sleep, and live medicine. Once it is gone, they usually try to stay involved in it on a more limited basis.”

In a life where one is defined by one’s career, the loss of that identity is very real. “The biggest non-financial task in retirement is finding a sense of purpose,” says Conroy. “While many people are happy to leave behind a job or career, they need to focus on the path in front of them. When they no longer need to wake up at a certain time and follow the work routine, a new routine needs to be established. Everyone needs a sense of purpose and without it, retirees can get lost.”

The loss of “purpose” can occur quickly. Beyer says, “In my clients’ experiences, it’s as soon as they’ve been home a few weeks and they adjust to not working anymore. Retirement is not just a financial change but it’s also a very emotional one. They have a financial plan and they are assured they have done all the right steps financially but after 45+ years in the rat race, that sometimes becomes a part of people. It takes time and patience to navigate these changes a lot of times.”

We see commercials showing happy and engaged seniors living the life of retirement in a blissful state. In real life, retirees ultimately discover those commercials may be a tad misleading. “Usually, people start to realize their misconceptions about retirement within six months to a year,” says Scot Landborg, Senior Wealth Advisor at Sterling Wealth Partners in Tustin, California, “and it starts to hit home with retirees that something is ‘off.’ They begin to recognize that they’re missing that purpose – that drive – and the value they received from working each day. Now that this underlying purpose is gone, if there is no suitable replacement for their fulfillment and attention, retirement can be far less fun than they imagined. Retirees also miss the social interactions and relationships they had during retirement. Worse, they aren’t sure how to rekindle this connection now that it’s gone.”

Is the grass greener on the other side of retirement? Thomas Kavanagh, a Vice President at Lenox Wealth Advisors in New York City, sees people start wondering about this after only a couple of months into retirement. “They have taken that long vacation and are settling into a ‘new normal’,” he says. “They find they have far more time on hand than they expected and have accomplished many of the tasks they thought might take up to year to complete. They have also opened their credit card and bank statements from that time and have found that their spending and savings patterns are very different from when they were working. Many of them are used to extended vacations, but had that purpose, vocation, or position of responsibility to come back to. That’s what many find missing after that ‘honeymoon period’ of retirement.”

If we are to believe it’s not in a retiree’s best interest for the retirement honeymoon to be over, then we’ve just stumbled upon a new and underreported role for the fiduciary.

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 Comfort From 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.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA

1 Comment

Only registered users can comment. Login is sponsored by…

Vote in our Poll


The materials at this web site are maintained for the sole purpose of providing general information about fiduciary law, tax accounting and investments and do not under any circumstances constitute legal, accounting or investment advice. You should not act or refrain from acting based on these materials without first obtaining the advice of an appropriate professional. Please carefully read the terms and conditions for using this site. This website contains links to third-party websites. We are not responsible for, and make no representations or endorsements with respect to, third-party websites, or with respect to any information, products or services that may be provided by or through such websites.