What They Don’t Tell You About Retirement

Written by Martin Shields

For most individuals in their working years, retirement is an oasis in the future where the stress of work is gone, the sun is always shining on their day of golf and travel to idyllic settings is commonplace. This is the view people have of the time they become financially independent and it is certainly the view that television and media portray of retirement. As an advisor, I have never had a client who doesn’t really enjoy retirement, and the frequent response I hear from the newly retired is “I don’t know why I didn’t do this sooner!” With all that said, there are a few significant changes that retirees experience that can be difficult for them to adjust to and most retirees are not aware of these issues before they retire.

The first issue many people struggle with is the concept of not having a paycheck and instead of saving and accumulating assets, you need to start withdrawing from an investment portfolio. This psychological adjustment is most acute for individuals who are the best savers and have been incredibly disciplined to always be fiscally responsible. Many retirees feel as though they are being irresponsible by taking distributions from the portfolio and there is a constant concern about running out of money.

This is where being an advisor becomes part therapist by explaining to them that these assets are available for the specific purpose of being spent in retirement. Through the financial planning process, we show them the strength of their retirement plan and impart to them the need to do the things they really want to do in life while they have their health because no one knows what the next day will bring. The goal of the planning process is to make sure our clients become educated investors who have the correct risk tolerance and understand what it means to be a long-term investor in the bond and equity markets. The planning process also provides them with a clear understanding of where their monthly cash flow will come from during times of volatility and we explain to them how their plan is easily sustainable until their mid- 90s.

Another issue is the sudden absence of personal connections that come from work and the sense of identity they get from their job. Many people do not have a social relationship with coworkers outside their work but what many retirees fail to realize is the social connection they have with their coworker during working hours and the value it provides to their life in celebrating good times and commiserating in bad times. It is not until they are retired that they realize that they miss those bonds and they need to find other organizations and passions to build similar social connections. It is also the case that part of their personal identity is wrapped up in their job and when they are retired, they need to have other interests that mentally engage and stimulate them and replace their work identity.

Finally, many retirees are excited about spending additional time with a spouse, especially if their work required them to travel to any great extent. The benefits from this additional time together are invaluable to both individuals but they may fail to realize that the daily rituals and household responsibilities each of them had pre-retirement are going to evolve and the additional time together may take some delicate dancing.

As I mentioned at the beginning of this article, most of retirement is positive but it is worthwhile to understand some of the challenges that can exist in retirement and learning ways to overcome and adjust to those challenges.