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BlogsRetirement 20/20 ®

Are We Ever Satisfied?

By Keith Weber
August 11, 2011
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A recent report from HSBC shows that people across the West -- including the U.S. -- are generally pessimistic about their retirement prospects while those in the East are relatively optimistic. And yet, by every objective measure, citizens in Western developed countries control significantly more assets per capita than their counterparts in Eastern emerging economies. This inconsistency begs the question: Are we ever satisfied?

Specifically, HSBC’s The Future of Retirement report showed that 64% of Americans are concerned they haven’t saved enough for retirement, with 59% expecting  to be worse off than their parents. Conversely, only 17% of Chinese expect to face financial hardships in retirement. Those findings are relatively consistent across Eastern and Western nations.

According to Richard Easterlin, a professor of economics at USC, the difference is all in perception.

Originally published in 1974 and updated just last year, Easterlin authored what has become a highly controversial paper that set forth the idea that beyond the point of meeting our basic needs, the accumulation of more wealth does not necessarily make a person happier or more satisfied with their life. 

The reason, he asserts, is because once we can afford to meet our basic necessities, we no longer view wealth in absolute terms, but in relative terms. We begin to compare our lifestyle relative to those around us. If we have an iPod but our neighbor has an iPad, we’re less satisfied.

When it comes to retirement, this paradox becomes clearly evident. 

Many of today’s near-retirees remember watching as the previous generation of workers in the 1990s received huge early retirement bonuses. With two decades of stock market and real estate growth in the ‘80’s and ‘90’s, corporate pensions still a rule rather than exception -- and a relatively sound social security program -- the pre-boomer Silent Generation of retirees significantly raised the expectation bar for the next generation.  Not known to shy away from keeping up with the Jones’s, boomers themselves have continued to raise the bar on their expected retirement -- potentially unsustainably.

The question then, is how can you help your clients create a satisfying retirement that may not live up to their previous expectations?  One answer is to help them clearly define their retirement in terms of their personal values and priorities -- which are typically absolutes -- so they can focus on what’s most important to them and not compare themselves to others.

For many people, “retirement” is a nebulous concept that simply means they won’t have to go into a job anymore. The reality is that the transition to retirement impacts just about every area of our lives. 

As a result of extensive research over the last decade, experts have identified six ‘key life arenas that need to be balanced and addressed to create satisfaction not only in retirement, but at any stage of life.  Rather than being based on external comparisons, these key life arenas are based on internal values and include:

  1. Finding and Integrating a Fulfilling Purpose
  2. Practicing Financial Maturity
  3. Continuing Personal Growth and Development (including Spirituality)
  4. Strengthening Family and Social Relationships
  5. Maintaining Physical Health and Mental Acuity
  6. Developing and Participating in Leisure and Lifestyle Interests

Clearly defining their values, expectations and priorities within each life arena helps both you and the client quantify and plan for specific goals. (For example, strengthening family relationships may have estate planning implications.) It also delineates those goals that are clearly financial versus those that are more personal. By helping your clients understand these issues and plan for their most highly valued personal life goals, you create stronger relationships and more realistic expectations as they look forward to retirement.

For more information or to review an online questionnaire that you can invite your clients to take to help them assess their self-satisfaction in each of these life arenas, visit Retirement2020.com.

____________

Keith J. Weber, CFP®, CPRC, is a speaker, author and founder of Weber Consulting Group, LLC, a financial advisor training, coaching and practice management consulting firm focused on providing life planning skills to advisors.  Through the website Retirement2020.com, Keith provides tools to advisors and clients to help build stronger client relationships.  Keith maintains the CFP® designation and is also a Certified Professional Retirement Coach.  His latest book, Rethinking Retirement, was released in July, 2010.  For more information visit http://www.kjweber.com/, http://www.retirement2020.com/ or connect with Keith on LinkedIn.

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Keith J. Weber, CFP®, CPRC, is a speaker, author and founder of Weber Consulting Group, LLC, a financial advisor training, coaching and practice management consulting firm focused on helping advisors build stronger client relationships through holistic life planning. Weber is also the publisher of Retirement2020.com, a life planning website used by advisors and clients to examine the non-financial aspects of retirement planning. Weber has been in the financial services industry for over 20 years as a nationally recognized financial advisor as well as in financial institution investment program management and broker-dealer executive management. ûDuring his planning career, Weber watched hundreds of clients struggle with daily disillusionment with their jobs while in pursuit of the retirement dream, only to see them continue to struggle with the lifestyle transition shortly after retiring. After being diagnosed with a brain tumor in 2005, Weber drew upon his own experiences and those of his clients to author the book Rethinking Retirement - How to Create the Life You Want Without Waiting to Retire. Weber now speaks frequently on the emotional and psychological factors that create quality of life at any age. ûWeber maintains the CFP® designation and is also a Certified Professional Retirement Coach. He is a frequent contributor to Bank Investment Consultant magazine, OnWallStreet.com and Financial-Planning.com. He is author of the Retirement20/20® blog on Financial-Planning.com.

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