Preparing clients for lifestyle changes in retirement
Retirement planning isn’t just about the money. CPA financial planners can help clients prepare in nonfinancial ways as well.
Retirement planning isn’t just about the money. CPA financial planners can help clients prepare in nonfinancial ways as well.
Retirement is a change in lifestyle. To help clients prepare, CPA financial planners need to go beyond savings socked away in 401(k)s, projected increases in the cost of living, and strategies to maximize Social Security payments.
Critical conversations years ahead of retirement should cover topics including where people envision living during retirement, what hobbies or charity work they wish to explore, and how to transition from what was likely a busy working life to an often dramatically different lifestyle.
“The nonfinancial aspects are probably more important in a way,” said Marianela Collado, CPA/PFS, CEO and co-owner of Tobias Financial Advisors in Plantation, Fla. “We are usually probing, ‘Have you thought about when you’d like to move on to something else?’ I don’t necessarily call it retirement but want to set the scene as to what they are going to be doing.”
The financial planners at Tobias Financial Advisors typically spend many years building close relationships with their clients, Collado said, and those connections allow for more direct conversations with clients about how they envision life in retirement. The discussions also give the planner a chance to point out potential pitfalls in the client’s retirement vision and help them avoid common mistakes.
“As financial planners, if you want someone to fully enjoy retirement, you need to help them get ready,” Collado said. “Who is better than us, who have seen many people go through it?”
Collado and other financial planners suggest having conversations with clients that explore goals and dreams, offer ways to test retirement visions, and include referrals to other experts if necessary.
ASK CLIENTS TO MAP OUT THEIR GOALS
When people have been working for decades, they can find it challenging to envision what life without a job looks like.
That’s why Alexandra Demosthenes, CPA/PFS, director of financial planning and senior wealth adviser at Investment Advisory Professionals in Boca Raton, Fla., starts asking clients several years before retirement what they’d like to do after they stop full-time work.
Is there a hobby they want to pursue more intentionally? A trip of a lifetime they want to go on once they are no longer tied to a job? Or perhaps there’s a potential move to be closer to grandchildren or to a climate without regular snow-shoveling.
Having those goals spelled out several years before retirement allows CPA financial planners to get more detailed about what the financial implications are, while helping clients start to ponder with more specificity about their lives post-retirement. Demosthenes has found that clients who just walk into retirement, without expanding on some goals and ideas of what to do, can flounder in their new life stage.
ENCOURAGE A TEST RUN
Many clients have big ideas of what they want their retirement to be like, but they haven’t always thought through the particulars, Collado said.
She recommends encouraging clients to try out some of the big lifestyle changes about five years before a planned retirement. That way, clients can get a sense of what their life could be like and whether it’s what they want.
“It’s good to encourage them to incorporate things they might want to do in retirement so it’s not a shock,” Collado said.
For example, if a person or couple plan to move, perhaps to a warmer climate, encourage them to investigate buying or renting a property in their desired location as a vacation home. Although this isn’t a financial possibility for everyone, it can enormously help those who can afford it, because they get exposure to the area and can decide if it’s really for them or not.
There are transitions other than moving that clients can explore before they retire. Collado talks to her clients about whether they are planning to do more charity work or dedicate more time to hobbies. If so, she encourages them to ease into that, perhaps by volunteering a few hours a month in the years before retirement or pursuing hobbies with a bit more intentionality before retirement.
She’s found that the clients who struggle the most in the first years of retirement are those who work long hours right up to the end and haven’t spent time exploring what their retired life will be like.
CHECK IN ON CLIENTS
It’s important to regularly check on clients to see whether ideas have shifted. Demosthenes recalled having one client who dreamed of living full time on a sailboat — despite never having lived on a sailboat before. In that case, she and her team made sure to check in frequently to talk about his retirement plans and the logistical details of his dream life.
“If there’s a big lifestyle change associated with retirement, there’s definitely more check-ins to put people’s minds at ease,” she said.
Having frequent and planned discussions as people prepare for their retirement and transition into it provides an opportunity for financial planners to help clients build out scenarios and connect clients with more resources as needs and plans shift.
For example, Collado recalled having a client looking forward to moving to a warmer climate and dedicating more time to her golf game. That client initially wanted to live outside the golf community she was joining in order to buy a less expensive home, but Collado encouraged her to think through where her likely social networks would be and consider spending a bit more to live inside the golf community. The client opted to stick with her initial plan but realized shortly into her retirement that she would be happier living inside the golf community.
Having those open and frequent conversations before retirement to tease out priorities empowered her client to make a change once she realized it wasn’t the best fit, Collado said.
“She was happier moving to the community even though it came with a costly annual membership fee,” she said.
HAVE REFERRALS AND RESOURCES READY
Bob Keebler, CPA/PFS, CGMA, of Keebler & Associates in Green Bay, Wis., recommends having lists of experts on a variety of retirementrelated topics ready to share with clients.
For example, he isn’t the one to talk through the particulars of health insurance options, but he is glad to send a client to an insurance agent or broker known to be knowledgeable and trustworthy. (See the sidebar “How to Discuss Health Care and Insurance” at the end of this article.)
Other nonfinancial consultants to consider include real estate agents and experts in housing options for seniors. (See “Talking Through Post- Retirement Housing Options,” JofA, Jan. 1, 2024).
Having vetted professional referrals allows clients to do the research and knowledge-gathering they need to do, and the CPA financial planner knows that the clients are getting good advice.
Keebler also suggests having handouts or checklists for clients, so they can start to tick through the nonfinancial considerations of retirement in the years before the big transition. For an example of a checklist, see the images on page 8 showing the “Considerations for Retirement” list (below) developed by Tobias Financial Advisors and shared with the JofA by Collado.
KEEP LISTENING DURING EARLY RETIREMENT
Finally, it’s important for CPA financial planners to schedule time with newly retired clients to help them with their adjustment. Sometimes, that means helping a couple used to bimonthly paychecks to set up a system where allotted amounts are drawn from savings and retirement accounts reflecting the same pay cadence they had during their working years and then checking in to ensure that plan is meeting their needs.
It’s also a chance to encourage clients to reflect on the changes they’ve made so far and see how to continue to help them as they explore this new life stage.
Demosthenes has annual touch points to prepare tax returns, but she suggests additional meetings during those first few years of retirement.
The extra get-togethers offer a chance to reassure clients who may be skittish and nervous about whether their years of saving and planning will be enough to get them through the coming years or decades. Also, the adviser can talk with clients about their spending habits and if there need to be any adjustments to stay on track.
“We try to keep a close eye as we want to course-correct before it’s too late,” Demosthenes said. “It is a chance to show them that they’re retired and they can stay retired.”
How to discuss health care and insurance
The health insurance landscape is one that many people need significant help understanding, said Bob Keebler, CPA/PFS, CGMA, of Keebler & Associates in Green Bay, Wis.
Many of Keebler’s clients who have long depended on employer-provided insurance are shocked when they find out how nuanced, and confusing, the open health insurance market can be. Clients who plan to retire before age 65 need to find out how to identify and purchase a health insurance plan that will cover all their needs. Those who are retiring after age 65 will need to understand how to purchase Medicare supplement plans. These options can be confusing to people initially, and CPA financial planners can cover this so people have an awareness of what’s ahead, Keebler said.
He strongly recommends that planners broach the health care topic five years before a planned retirement by including those discussions in scheduled check-ins and giving an overview of what’s ahead as well as providing resources such as lists of health insurance agents or groups focused on helping seniors navigate the process. Having detailed discussions ahead of time gives clients time to factor those costs into their financial forecasts and to gain awareness of how to navigate the situation should they or their partner or spouse need to accelerate their retirement plans because of health or other reasons.
CPA financial planners at Tobias Financial Advisors in Plantation, Fla., can connect their clients with Medicare specialists the firm works with to help explain how supplemental plans work and which ones are best in different situations. In a common example, a client may expect to split significant amounts of time between a primary residence and a second home or visiting family out of state. In those cases, said Marianela Collado, CPA/ PFS, CEO and co-owner of Tobias Financial Advisors, it can make sense to buy a more robust plan with national coverage as opposed to a cheaper option largely limited to a person’s home state.
About the author
Sarah Ovaska is a freelance writer based in North Carolina. To comment on this article or to suggest an idea for another article, contact Jeff Drew at Jeff.Drew@aicpa-cima.com.
LEARNING RESOURCES
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AICPA & CIMA RESOURCES
Podcast episodes
“No Plan B: A Personal Lesson About Retirement Readiness,” JofA, Oct. 19, 2023
“How to Reduce Overwhelm for Your Clients,” AICPA & CIMA, May 12, 2023
“How to Guide Couples Through Their Retirement Quandaries,” AICPA & CIMA, March 22, 2023
“Retiree Funding of Healthcare Prior to Age 65,” AICPA & CIMA, May 5, 2022
“Discover How to Have Impactful Legacy Conversations,” AICPA & CIMA, May 2, 2022
