Retirement: Avoid the pitfalls and plan for the possibilities

As more and more Baby Boomers (those born 1946—1964) near the end of their careers, no business task seems more difficult than slowly disengaging from the thing that gives you your identity, the clients you love, the routine you’ve established, and the team you’ve been integral to for many years.

The retirement process is a truly humbling and sometimes painful experience that most of us do not understand or appreciate. To make a difficult process easier for those facing it, this article outlines retirement challenges and success strategies. Let’s begin with five common mistakes to avoid.

Avoid these 5 common mistakes

Don’t wait until the last minute to tell firm leaders or begin a transition

Your firm’s partnership agreement may have a notice period to give plenty of time for a proper and complete transition (we recommend a minimum of two years). Even if you aren’t required to give notice, you should share your retirement plans with the key leaders in your firm and make concrete plans to begin introducing others to your clients and preparing for a complete transition, which ideally occurs over at least two cycles of service. If your position has considerable internal responsibilities or if you’re involved with networking groups, associations, or other business development activities, you’ll need time to identify the right person to assume each role. Step out of any denial you’re carrying, confess your plans, and begin transitioning.

Don’t hang on too long

For some, the idea of giving up their work identity and responsibilities can be overwhelming, leading to the temptation to stay in a particular position too long. Your firm needs to learn to thrive without you, and the people around you deserve an opportunity to step up and take on your clients and other responsibilities.

Even if your firm has asked you to continue on in some capacity, don’t hang on to your core responsibilities. Doing so would only tempt you to put off your acceptance of the necessary transition. And when the time comes to truly quit working—either because you’re ready or because the firm does not wish to continue with you—you should make the process easier for those you’re leaving behind and let go with grace and dignity.

Don’t communicate that you’re retiring when you’re simply transitioning

For most of us, the term “retirement” means quitting work at your firm. For many, the first step toward full retirement is not completely quitting work. Instead, many take a first step of selling back their equity (beginning their buyout) and transitioning their work, but continuing on at the firm, working in new and different ways. If you and your partners plan to have you continue working at the firm in some capacity, consider using different language to describe this first step in the retirement process. When communicating your plan, you can say, “I’m going to be transitioning my responsibilities and cutting back some,” or “I’m going to be changing roles at the firm,” or “I’m going to begin working part time, taking time off during the slower periods.” When you say, “I’m retiring,” most people picture you being gone, and it can create uncertainty that isn’t necessary in the early stages of a transition.

Transition completely, even if you’re going to continue working after you officially retire

The ideal scenario is that you transition virtually all that you were doing in the “old role” to successors and that you develop a “new role” with new responsibilities. For instance, if you have been playing the role of managing partner, plan to transition all leadership responsibilities before your official completion date and define a new role where perhaps you are active in the market, developing business, and/or teaching a portion of your firm’s leadership curriculum. If you are a tax partner, plan to transition all of your clients and existing work before your completion date and then take on a new role—for instance, reviewing higher-level returns for people other than your clients. Most firms can always use another great reviewer!

Don’t be selfish

For many facing retirement, a feeling of entitlement creeps in—based on the years of investment you’ve made in the firm and the respect you feel you’ve earned. This entitlement attitude can make it look as if, first, you think you know best and, second, the firm owes you something. That way of thinking can sometimes cause a dominance or defensiveness when discussing transition that makes it very difficult for fellow partners and firm leaders to openly share what they want (or don’t want) to see happen in the transition process. Please do all that you can to set your selfish interest aside to do what’s best for the entity as a whole. Be open to honest input from the firm’s leaders about what they think will work best. The days of your calling the shots are waning, and the people you’ve entrusted must step up and do what’s best for the firm. Hopefully, your love of what you’ve built will enable you to step outside of yourself to do what’s right for the greater good.

Retirement isn’t easy, and it surely isn’t one-size-fits-all. Regardless of your transition plans, being gracious, generous, objective, and clear in your communications and open to the input of others will go a long way to easing your path.

A 6-step strategy for creating a life after work

One way to counter negative thoughts about retirement is to prepare a list of the possibilities for your post-career life (see the sidebar, “Common Fears About Retirement”). The following six retirement preparation steps will help you develop a possibilities list. This is how it works:

1. Begin a list of all of the things you might do after retirement

Open a Microsoft Word document or pull out a plain sheet of paper. Consider this the first moment of refining your possibilities list. You will update it many times, perhaps over several years, so you want it to be accessible and not easily lost or misplaced.

You do not have to be absolutely certain you will tackle an item before you place it on your list. Consider this a brainstorming exercise, so if the idea appeals to you, write it down. It may be traveling to a specific location, taking a class, teaching a class, mentoring a child, giving back in some other way, cooking or grilling more, hiking, training for a race, attending baseball season opening games … you get the idea. When you run out of steam, save your possibilities list to revisit later.

2. When you think of something that might be interesting to do or would be good to tackle if you had time, add it to your possibilities

Update the list over time. As it gets longer and more filled in, consider reorganizing it and structuring your possibilities by the nature of the activity: business-related, education-related, community service-related, family-related, outdoor activities, sports and fitness, travel-related, etc. If you spend enough time generating ideas, you’ll end up with a very well-organized, possibilities-packed list.

3. Share your possibilities with others

If you have a spouse or significant other, children, or grandchildren, consider sharing aspects of your possibilities list with them. This will provide you a sounding board for your possibilities and also enable you to enroll others in supporting your ideas. Sharing your possibilities aloud with others also makes the possibilities feel more real and may cause you to gain more energy to pursue certain ones.

4. Try some out

You don’t have to be retired to begin living out ideas from your possibilities list. Take time off and pursue something on your list. Engage more in activities away from work. Begin to taper your work time to pursue more external possibilities.

5. Keep the list “full”

If you complete something on the list, add something new to it. Keep your potential activities list so big and interesting that it begins to call you away from work.

6. Don’t leave it behind!

As life’s many possibilities draw you away from work, be sure you bring your possibilities list with you!

All the way along, you have shaped your professional destiny. Why should you approach your retirement destiny any differently? Just consider the possibilities!

Common fears about retirement

If I don’t work, I’ll have no choice but to become a “mall walker.” This line of thinking is remarkably common but patently false. You get to choose what you do after you leave your firm (and as you cut back on work before your final departure date). Your life after work is up to you to shape and make happen.

If I don’t work here anymore, I don’t know how I’ll introduce myself to others. I will lose my identity. It’s true that you can’t hold yourself out as a current member of the team after you complete your time with the firm; however, you can, and will always be able to, say that you are a former partner of your firm.

If I don’t work, my brain will go to mush. There are so many great ways to keep your mind engaged outside of employment, including volunteering in situations where your business savvy and financial acumen can make a real difference for others. Many great organizations match retirees to organizations in need. Check out Encore.org, which connects experienced professionals with “social purpose organizations.”

If I don’t work, I’ll be poor. To get an idea of what you’ll need in retirement, use the AICPA retirement calculator (360financialliteracy.org). One possibility might be selling back services to your firm or delivering value in another way to a noncompetitive organization so you can maintain a steady revenue stream, though it will likely be smaller than the one you earned when you were at your firm.

About the author

Jennifer Wilson (jen@convergencecoaching.com) is a partner and co-founder of ConvergenceCoaching LLC, a leadership and marketing consulting and coaching firm that helps leaders achieve success. Learn more about the company and its services at convergencecoaching.com.

To comment on this article or to suggest an idea for another article, contact Jeff Drew, senior editor, at jdrew@aicpa.org or 919-402-4056.

Editor’s note

This article was originally published as two CPA Insider articles, “Heading Off Into the Sunset? Avoid These 5 Retirement Pitfalls,” Dec. 7, 2015, and “These Steps Can Help You Embrace an Exciting Retirement,” Jan. 11, 2016.

AICPA resources

JofA articles

• “Preparing for What’s Next,” Dec. 2015, page 40
• “Succession Challenges for U.S. CPA Firms to Tackle,” Nov. 2014, page 54
• “Seven Steps to Closing a Succession Sale,” Dec. 2013, page 48
• “A Two-Stage Solution to Succession Procrastination,” Oct. 2013, page 40
• “How to Select a Successor,” Sept. 2013, page 40

Publications

• CPA Firm Mergers & Acquisitions: How to Buy a Firm, How to Sell a Firm, and How to Make the Best Deal (#PPM1304P, paperback; #PPM1304E, ebook)
• The CPA’s Guide to Practical Retirement Planning (#PPF1501E, ebook)
• Navigating Mergers & Acquisitions: Guidance for Small and Mid-Sized Organizations (#PGN1302P, paperback; #PGN1302E, ebook)
• Securing the Future (#PPM1307HI, vol. 1 & 2 set, paperback; #PPM1305P, vol. 1, paperback; #PPM1305E, vol. 1, ebook; #PPM1306P, vol. 2, paperback; #PPM1306D, vol. 2, PDF, online access)

CPE self-study

• Succession Planning: Developing Tomorrow’s Leaders Today (#BLI165040, one-year online access)
• Understanding Business Valuation (#732886001, text)

Conference

Practitioners Symposium and Tech+ Conference, June 5—8, Las Vegas

For more information or to make a purchase or register, go to cpa2biz.com or call the Institute at 888-777-7077.

Online resources

• PCPS Succession Planning Guide & Tools, aicpa.org
• PCPS Succession Readiness Assessment, aicpa.org
• PCPS Succession Timing Calculator, aicpa.org
• Practice Continuation Agreements: A Practice Survival Kit, aicpa.org

Private Companies Practice Section and Succession Planning Resource Center

The Private Companies Practice Section (PCPS) is a voluntary firm membership section for CPAs that provides member firms with targeted practice management tools and resources, including the Succession Planning Resource Center, as well as a strong, collective voice within the CPA profession. Visit the PCPS Firm Practice Center at aicpa.org/PCPS. Visit the Succession Planning Resource Center at aicpa.org.