Retirement planning – far more than number crunching

How does our identity change when we retire? And what does this mean for paraplanners putting together a financial plan? Jacqueline Lockie CFP™ Chartered FCSI, CISI head of financial planning, considers some recent research

retirement planning

You may have seen the research publicised in an article on the BBC news channel on 20 August entitled ‘Why we lie about being retired’. It talks about the findings of four years of research by Professor Amabile at Harvard University in the US. Her team interviewed 120 individuals at different stages of life in various parts of the US and talked to them about their perspectives about retirement. The team found that retirees start off relaxing and enjoying being retired, but the shine can soon wear off.

The study identifies that many people do not envisage what life will be like when they retire. One reason suggested for this is that the financial planning that goes on prior to retirement seems to be viewed as more of a mathematical exercise of crunching numbers to ensure the retirees have sufficient money to live on. But as we all know from creating financial plans for clients, doing the number crunching is just one part of the process. Getting the client to imagine what life would be like when they retire is something I don’t often see talked about in client meetings or written about in financial plans.

What will help give your clients’ lives meaning in retirement?

Imagine this scenario: you are retired, it is a rainy Tuesday afternoon, what are you doing? Having a doze while watching Midsomer Murders or doing something a little more exciting? Having a doze is all well and good for our health, but perhaps not on every rainy day.

One of the most interesting things about this research is what they find when they ask retirees what they do for a living. Most say they’re retired and add their previous job to the statement, eg, “I’m a retired librarian” or a “retired banker”. The researchers suggest that we do this naturally because we seek some sort of identity when retired.

But would a client really need to add their previous job title when retired if they felt their life post full-time work had value and meaning? As paraplanners, you are in an ideal position to ensure that the financial plans that you create for clients help them see how they might live a long and fruitful life in retirement.

The research also comments on the economic factors at play, which made me think about the potential impact on cashflow planning. As governments around the world, but particularly in Europe, start extending the normal retirement age, how might this impact those who are planning for their retirement in less than ten years’ time? This made me think about what many of my own clients used to do for a living before they came to me for advice. If, like me, you write financial plans for white collar workers, consider whether they have always undertaken roles like that. If some of your clients started work as a manual worker before starting their own business, it might be that extending their retirement age to allow more time to meet their objectives, might not always work well. Some might suffer more ill health as an effect of previous occupations. So, understanding about a client’s entire working life is important.

We all know that if we use the client’s own words and terminology when writing financial plans for them, this makes it personal to them as they can see themselves reflected in your words. Their goals and objectives are brought to life. But research shows that when it comes to retirement, there is more that we can do to show clients what that could really feel like.

This article first appears in the October edition of Professional Paraplanner. Republished with permission.

Published: 22 Oct 2019
  • Wealth Management
  • Financial Planning
  • retirement research
  • retirement planning
  • Professional Paraplanner

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