"Never before has mankind had 20 extra years" to live after retirement, according to Gary R. Jay, a certified retirement coach and owner of Remarkable Resource. "How do you plan for that?" he asked.
Jay, who works with financial advisors to give them skills to help clients transition into what he calls the Third Age, said our ever-growing retirement-age population is "at an explosion point."
"There's been a bottled-up need to do more planning around this time of life," he said. "This need has been created within the last generation, due to miracles of science increasing longevity and [the fact of having more] women in the workplace and more money to spend in the household."
Financial advisors are on the front lines of this explosion, say both advisors and consultants.
"As financial advisors, we are often the only professionals that people consult when preparing for retirement," said Howard Pressman, a certified financial planner with Egan, Berger & Weiner.
"Over the past three years, I noticed that, despite all the planning, some of my clients—about 25 percent—still weren't happy," he said. "I came to realize that there's a difference between being financially stable and being happy."
Pressman said many of his clients were "left with a void."
"I could see changes in their personality," he added. "They told me, 'I'm having trouble with this.'"
As a result, Pressman began to incorporate more of the psychological side of retirement into his practice. He took a three-pronged approach by:
- Asking clients to describe their ideal retirement and come up with a concrete vision of what they wanted to do. He encourages them to talk about their emotions, especially regarding their sense of loss relating to job and identity.
- Bringing in a life coach to do workshops to help clients purposefully design this next phase of their lives. "Attendees said it was great to be in a room with others in a similar stage in life," he said.
- Joining the local chapter of the Life Planning Network, an organization for professionals who help clients "navigate the second half of life." This association provides him continuing education, a referral network and informational resources.
"Post-career, post–child rearing is a sweet spot of life," said Kathleen Roth, certified financial planner and partner with Waterstone Partners. "It's also a period of turbulence, much like adolescence."
Roth called early retirement "uncharted territory, with a considerable amount of unpredictability and fear."
"Health changes occur with greater frequency with age," she noted. "Relationships change—too much togetherness, empty nests, divorce [and] death—and, unfocused, people can spend a lot of time, money and effort filling time without satisfaction."
Coming to believe so-called "transition psychology" plays an important role in planning for retirement and other life changes. Roth became one of a few advisors to earn the Certified Financial Transitionist designation from the Sudden Money Institute.
Some say the whole notion of retirement must be reexamined to successfully work through this transition.
"Formerly, the concept of retirement was a 20- or 30-year vacation," said Keith J. Weber, a consultant to financial advisors and president of Weber Consulting Group. "But in reality, retirees become very bored [because] they still want to be engaged and active."
Thus, one of Weber's areas of expertise is helping advisors work with clients to create satisfying retirements.
"A large proportion of baby boomers will not be able to afford to retire the way they'd like to," he noted. "They have no choice but to continue working or retire at 62 with Social Security. It's very different than the dream."
Weber's prescription for them? "Find something you love to do, and do it for as long as you possibly can, whether you must work or not," he said.
Weber has identified activities people should pursue within six "life arenas" to have a rewarding retirement:
- Engage in a fulfilling purpose.
- Practice financial maturity (i.e., fully understand personal financial statements and the fundamentals of financial planning).
- Continue personal growth and development (including spirituality).
- Connect with family and friends.
- Maintain health and wellness.
- Develop leisure and lifestyle interests.
In order to enter helpful conversations around retirement visioning, he counsels advisors to develop a different mind-set, too.
"Many financial advisors expect to be the experts, but it's not about having the answers; it's about asking the right questions," he said.
And there are three types of such questions, Weber said. What he calls Level I questions are those with specific answers. For example, "How much?" or "When?" Level II questions deal with personal values (e.g., "What's important about X?"). And Level III questions relate to one's personal legacy (e.g., "How do you want to be remembered?").
The bottom line, Pressman at Egan, Berger & Weiner said, is to "get clients to start thinking about what they want as soon as possible—so we can put a dollar amount on their future lifestyles."
10 tips to planning a successful Third Age
- Put yourself squarely in the driver's seat. Decide when and how you retire and who you will be. Don't let someone else's definition of retirement define your retirement.
- Cast off society's belief about aging and retirement. Retirement can be the adventure of a lifetime. It doesn't have to be a permanent rest stop.
- Clear the clutter and chaos from your life. It's the best way to rescue precious time, energy and resources.
- Take the time in your retirement planning to uncover what you really want for your health, relationships, passion, creativity and play.
- Assure that you make the best retirement decisions for you. Stop letting your inner committee (i.e., head noise) drown out your inner voice (heart wisdom).
- Change your approach. The future you dream of will never be yours as long as you're stuck in old ways of being.
- Find positive role models to inspire and guide you. They're all around you.
- Discover a clear purpose for your life. Make sure it puts a smile on your face and pulls you out of bed in the morning.
- Write a personal mission statement that expresses who you are, what you'd like to do and where you're going.
- Find out what you're supposed to be when you grow up so you can evolve into a rejuvenating and revitalizing Third Age.
Source: Gary R. Jay, Remarkable Resource