I was reminded today how difficult it can be for some people to move from worker to retiree, while others make the transition easily. There are those who devoted their careers to their employer(s) and who found it difficult to separate their corporate self from their personal self. So when the time came for retirement, they had difficulty.
Take the mid-70 year old, whose career has spanned over 50 years and who still works full-time and volunteers in industry-related activities. There are essentially three buckets that take up his time – his job and two volunteer positions. He thrives on discussion of what’s happening in his field and relies on his contacts to remain current. But he’s starting to feel that it’s time for change. When we talked about giving up one of the time buckets there seemed to be a reason why each carries unfinished business to be seen through to the end. As our discussion continued, I asked what a day would look like if some of the current activities were not part of the picture. There was real concern over how the hours would be filled – not really interested in playing a lot of golf, doesn’t play bridge, isn’t handy around the house, likes to travel, but you can only do so much. The things that he sees his peers doing are not for him. And you can only walk the dog (if the recently departed dog is replaced) so many times in a day. I mentioned other volunteer activities that can be meaningful, including delivering Meals on Wheels, visiting shut-ins, or driving seniors to appointments. Shortly after our meeting, I received an email that he has resigned from one of the three “buckets”. One step at a time.
In another situation, I was worried that early retirement at 60 by a client who had served in senior executive positions with a multi-national corporation would not know how to spend her time. She lived and breathed for her work. Was I wrong on this one! Now in her fourth year of retirement, she is doing those things she never had time for - exploring Toronto’s diverse neighbourhoods, subscribing to theatre and music productions and volunteering within the arts community. In between, she travels extensively, taking time in each place to learn about and absorb the culture.
But there is one common thread in these two cases. Both hated the thought of using their savings. It was as if their lifestyle had to suffer at the end of the paycheque. No matter how many projections we ran showing that these clients are financially independent, they didn’t see it. Both felt they would need to sell their homes to reduce their costs. So what to do? Well, in the case of the 60 year old, we have taken steps to replace the salary with a monthly income stream made up of some annuities (yes, annuities do have their place) and some withdrawals from other investments. (We invest on a total return basis, so don’t think in terms of withdrawing only investment income.) The case of the mid-70 year old is still in process, but strategies are taking shape to supplement defined benefit pension income.
All of which goes to show us that no matter what the numbers say, human behaviour is a stronger driving force in the profession of financial planning. Being able to recognize the stumbling blocks and suggest strategies to overcome them is a key part of our role.