Retirement planning used to be easy. Ten years ago it was a simple mathematical calculation that you could apply across the board to just about everyone. But today, with so many different visions, versions and variables impacting each client, retirement planning has become both a financial planning puzzle and an emotional minefield. To navigate this minefield you need to know both the client’s financial situation as well as their hopes, attitudes and expectations about retirement.
Earlier this summer, AARP released the latest version of their “Baby Boomers Envision What's Next?” survey. In it they define five distinct segments of the baby boomer market that each demonstrate unique attitudes, expectations and behaviors toward retirement.
The Self-Reliants, representing 22% of boomers, are highly optimistic, the best educated and most affluent segment of the baby boomer market. While they continue to be satisfied with the amount they are currently putting away for retirement and expect to be able to live off of those savings in retirement, none -- and yes, you read that correctly -- none of them plan to fully stop working when they retire.
To the self-reliant segment, retirement clearly does not mean the end of their productive lives.
The Enthusiasts, representing only 10% of boomers, enjoy the second highest income among the five segments and are both the most optimistic and most likely to say they “can’t wait to retire.” By contrast, this group plans not to work at all when retired and continue to view retirement as a time of leisure and play.
Today’s Traditionalists, the largest segment at 26%, have the most confidence in both Medicare and Social Security, but feel somewhat less confident in their own savings. As such, this group also plans to continue to work in retirement, but more so for the additional income rather than for enjoyment or fulfillment.
The Anxious, (22%) and The Strugglers (20%) have low expectations for retirement. These groups have been heavily affected by life events such as a job loss, a major illness or loss of a partner or spouse. Many among these groups expect to have to scale back significantly at retirement and anticipate relying heavily on continued work, Social Security and Medicare to meet their daily needs.
The takeaway for advisors is that our clients have different needs and therefore require different types of help from us to make their retirement (a.k.a. - their “second act,” to be more current with the times) successful.
For the Anxious, Strugglers and even the Traditionalists, much of the help we can provide will focus around basic budgeting, setting priorities and living within their means.
But it may also require turning a negative perception about the continued role of work in their lives into a positive (or at least a neutral) and finding ways to help them achieve some of their life goals regardless of employment status. For example, I had one client who hoped to turn his passion for photography into a full-time hobby when he retired. When he was laid off early, we talked both about finding a job in his traditional line of work (which he planned on retiring away from in 5-10 years anyway,) but also of taking that hobby and turning it into a legitimate business that he could run for the next 15-20 years.
While he was not likely to make as much money with his photography, the income stream could easily be expected to last considerably longer.
For the Enthusiasts, your real value can often be shown 6-12 months after their retirement. For them, retirement is expected to be one long, continuous vacation.
But we’ve all had clients who re-entered the workforce or took on a new project just to fight boredom or create a sense of purpose in their lives. Worse, we’ve probably all had clients who needed to get back into the workforce but didn’t, leading to depression, pessimism and social isolation.
These are the folks who often need to be told that traditional ideas of retirement don’t always fit, and that it’s normal to feel the need to be involved. So many of these types have long held a specific idea of how their retirement is “supposed” to go, they unconsciously feel they need permission to do something different.
Finally, the Self-Reliants may well be the most desirable client from a financial-planning perspective, but to really connect with them means connecting with their values and personal priorities, not just managing their money.
For the Self-Reliants, money is no longer their biggest concern. According to US Trust’s 2011 Report Insights on Wealth and Worth,™ it’s the quality of their relationships, their ability to take action on important personal goals, and the self-esteem they garner from making a difference that are most important. Making sure that you understand those priorities and are able to propose solutions that will help them take action on them are the keys to developing long-term, trusting relationships.
It’s clearly no longer a “one-size fits all” retirement world. Deepening your relationships with existing clients and connecting at a core-value level with your ideal prospects means developing a variety of soft skills to navigate the emotional minefield each group faces. Developing those skills and integrating those discussions into your client conversations may well be difference between being successful or being blown up.
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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 providing relationship development 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
