It’s autumn and with the summer now in the rear view mirror, it’s time for many of us to re-focus and begin setting out plans for the busy months ahead. Interestingly, Fidelity’s research reveals that the summer is the most popular time for Canadians to retire, with one-third of people who retire in any given year doing so during the summer months.
This is followed by the fall, winter and spring as less popular times to retire, in that order. These findings make sense. Summer is associated with holidays and generally taking it easy. Some view it as the beginning of one long holiday. There are lots of things to do in the summer. You can be as active as you want, but you can enjoy summer doing almost nothing – enjoy the weather, the flowers, the beaches.
Simply going for a stroll can be a treat when the weather is warm and you don’t have to don a coat or watch your footing in the snow. But then fall comes and the realization sinks in that others are starting their fall activities – going back to school, going back to work. But, the recently-minted retiree doesn’t have these activities to look forward to. That’s when the realization sinks in that retirement isn’t a holiday. The fact is that a successful retirement requires both study and work.
How can you help your newly-retired clients? Why not run a course on “Living in Retirement 101”. Plan it around a school year. Classes could begin around now. Schedule a check-up on your students’ progress (the end-of-term exams) just before the holiday season. Resume classes for the winter term, followed by final ‘exams’ in the spring. If the student has been studious, there will be a successful completion of the ‘school year’.
The curriculum could look like this: Teach your newly-retired clients the basics in the fall and go on to some more advanced topics in the spring. I suggest dividing the course into two streams: financial affairs in retirement and activities in retirement. Of course, the two are closely related. A colleague of mine put it wisely, “What we plan to do in retirement defines what we do to plan for retirement”. Hopefully a lot of the planning has been done when your clients hit retirement, but it is never too late to plan ahead. Let’s deal with the financial side first.
One of the basic topics could be preparing a retirement income plan.
A second part could discuss the day-to-day administration of clients’ finances. This would include the change from the regular pay cheque, same time each month, and the long-held routine of paying the bills, to the new reality of several sources of income, possibly with different frequencies.
A third part could focus on financial market behaviour and the client’s portfolio. In retirement, people tend to pay more attention to financial markets and economic news. They do this partly because they have the time to do so and partly because their monthly income may be significantly affected by market behaviour.
A fourth part could include a review of the ‘Five Key Risks to Retirement Income’. This is an ideal time to discuss the risks posed by longevity, inflation, asset allocation, withdrawal rates and health care.
The second stream of the course would discuss activities in retirement. I have argued for a long time that financial planning is not the hardest part of retirement planning. There are lots of financial tools that advisors can use to guide their clients. The non-financial side is more difficult. Envisioning a retirement – what a person will do, what will give them satisfaction, how their family life will be organized in retirement – is another matter entirely for many retirees. At an intellectual level, people understand that they will stop working and have choice about how they will spend their time. Emotionally, and practically, it is not so easy. If asked, most people who are in mid-career would say that they would like to have more choice in their daily activities. Yet, when they actually get to the point where they do have choices – retirement – some find it difficult to cope.
Start at the most elementary level. List the activities your newly-retired clients might engage in, such as travel, volunteering, hobbies, household maintenance, paid employment and learning. There are myths around each of these. Travel can be exciting, educational, adventuresome and entertaining, but – depending on how it is done – also expensive. There is also the potential issue of couples having very different views on whether, where and how to travel.
Provide a list of volunteer opportunities in your community, what they entail and what skills are needed (if any). The world would not survive without volunteers, but there are myths around volunteering. One is that it is not worthwhile because you are not getting paid. A second is that you need very specific skills. Fortunately, there is increasing respect and public recognition for volunteering, but the real payoff is the satisfaction of doing something useful, usually for others. And, most volunteer jobs require only that you show up and have a positive attitude.
Hobbies in retirement can be a terrific outlet or a curse. By definition, hobbies are a part-time activity. A few people are able to turn them into a full-time activity, but only a few. There are far too many golfers who thought they wanted to play seven days a week but who found out in retirement that they didn’t. But – and here is where the choice issue comes into the picture – retirement can be a time for new hobbies.
Household maintenance/repairs/renovations can either be a pleasurable pastime or a pain. We do know that it has to be done, and that homes don’t wear out any less rapidly because there occupants are retired. Some retirees decide to do major repairs or renovations themselves in order to save money. If they have the skills, this can be a terrific idea. However, moving from a career to retirement doesn’t automatically turn a person into an electrician, plumber or carpenter if they didn’t already have some skills in these areas.
Paid employment in retirement is an emerging trend that will break out in the years ahead. There will be an increasing demand for older workers as fewer and fewer young people enter the labour force (a result of Canada’s low birth rate for the past many years). Working in retirement can be fun for some people. If a retiree thrives on some sort of routine and finds a job that provides personal satisfaction and amiable colleagues, it can be a wonderful way to spend some or all of retirement. Fidelity’s research reveals that largest proportion of the people who work in retirement do so for four or five years after retiring. Some people continue to work at what they did in their career, others branch out. The choice of a retirement job is almost limitless.
Learning is one of the fastest-growing retirement activities. Schools, colleges and universities are responding to the growing demand. Once again, the range is limitless, everything from a one or two evening course to pursuing a university degree. One of the great things about learning as a retirement activity is that it keeps the brain active. Brains are like muscles – they thrive on use. And, speaking of muscles, some discussion of the benefits of regular physical activity should absolutely be a part of the course.
You might want to include a section on “Personal Rules for Living in Retirement”. It would include such topics as the need for each retiree to discover whether they thrive on a routine or not, negotiating retirement with one’s spouse (time together, time apart, household responsibilities), and the basic rule of a successful retirement “it doesn’t matter what you do provided you do something”.
You may be thinking that what I am suggesting is a lot of work. It is. But, you don’t have to do it all yourself. There are many people in the community who would be pleased to talk to your students. And, a very effective technique is to have ‘experienced’ retirees come and discuss their successes and failures. In addition to happier clients, “Living in Retirement 101” provides the advisor with the opportunity for regular interaction with clients, always a good thing for client satisfaction and, just possibly, a meaningful way to grow your business.