We work with many clients who are approaching or entering their retirement years. The “drawdown phase” of our clients’ lives has many aspects that make it different from the working years when they are “accumulating” assets. We have talked in past blog posts about some of the more technical aspects of retirement planning. We have also talked about the “life planning” aspects of retirement planning in other articles. At the AICPA Personal Financial Planning conference earlier this summer, where I led a panel on retirement planning, one of the best sessions I attended was on “retirement coaching” with Mitch Anthony. Mitch has written some great books on retirement, like The New Retirementality, which I highly recommend. His session made me think a lot about the clients we have worked with, especially those who seemed to have a very successful transition to the next phase of their lives after their primary careers. It also made me think about those who have not made the transition as well or who are struggling with the concept of “retirement”. I would like to share a few thoughts from this session and our experiences with clients.
I think our nature as CPA Financial Planners drives us to focus first on the technical planning and the “numbers” when working with clients on their retirement planning. While we typically try to go deeper with our clients to understand what they really want in this next phase of their lives, I worry that we really should be starting the conversation with this discussion. How you are going to spend your time in retirement is just as important a question as how you are going to pay for it. What will the role of “work” be going forward? Work should be defined as engagement that brings value to others and meaning to you. It is important to have enough purpose in your life to wake up in the morning and enough money to sleep at night.
When I think about clients who have made a successful move from their careers to the next phase, the ones who have made the smoothest transition are the ones who were proactive and thought through a plan. This plan isn’t about the money but is instead about what you will do with each day in retirement. The concept of retirement might be something you’ve dreamed of for years and you envision yourself sitting on a beach all day or hitting the golf course every morning. For some people that might work, but many others will quickly tire of this “vacation” lifestyle. As human beings we crave a purpose to our life and don’t feel fulfilled without it. Before you retire it’s important to step back and think about what really drives you, and as Mitch Anthony says, to “Retire on Purpose”. Here’s a great quote from Mitch on this:
“I have seen far too many retirees adrift on the sea of aimlessness, boredom and discontentment. They found their freedom from the old job and old routines but didn’t sufficiently contemplate what that freedom could lead them toward.
There is an entire generation of people arising who have decided to make the “third age” of life the most meaningful. This group understands the habits, attitudes and pursuits that directly correlate with successful aging and staying young at heart. Words like curiosity, connectivity, challenge and contributing are hallmarks of a new generation of retirees, who are transforming “retiring” into “refiring” and “reclining” into “refining”. These people are leaving an indelible impact on the people, the ideas and the causes they care most about.”
All this doesn’t mean that you can’t relax and enjoy yourself in retirement. You worked hard for many years to reach a point of financial independence where you can have the freedom to do what you want. The problem is you’ve probably worked so hard all those years you haven’t had the time to step back and think about what really matters to you and what you want to do with that freedom.
This also doesn’t mean you can ignore the numbers and the important aspects of your personal finances like your spending. This analysis is intertwined with finding your purpose and understanding where you will spend your money in retirement will help you determine what you can afford to do. The key point here is that the numbers are important to developing a successful retirement plan but if you don’t first have a plan for what you’ll do in retirement, the numbers won’t matter.
While our CPA background uniquely qualifies us to help you with the numbers behind your retirement plan, our many years of experience working with clients making the transition to retirement has shown us that numbers don’t tell the whole story. If you are thinking about your own retirement we would be happy to talk with you about it. We want to be an integral part of your life and your finances!
-Lyle K. Benson, Jr., CPA, PFS, CFP
The views expressed represent the opinions of L.K. Benson & Company and are subject to change. These views are not intended as a forecast, a guarantee of future results, investment recommendation, or an offer to buy or sell any securities. The information provided is of a general nature and should not be construed as investment advice or to provide any investment, tax, financial or legal advice or service to any person.Please see Additional Disclosures more information.