CPA INSIDER

Why you should discuss the nonfinancial aspects of retirement with your clients

Goals and lifestyle factors are as important to retirement as money.
By Allan Kunigis

While there's no denying the importance of being financially prepared for life after one stops receiving a paycheck, planning for retirement needs to involve much more.

Keith Lawrence, founding partner of coaching firm LifeScape Solutions and co-author of the book Your Retirement Quest, discovered the importance of planning for the nonfinancial side to retirement while working as a human resources executive as Procter & Gamble. He saw recently retired employees returning to the company after six months. "They were bored or their spouse practically kicked them out of the house," he recalled.

Advisers are missing an important component of retirement planning if they ignore the nonfinancial aspects of life after their clients' careers. Broadening their focus can help expand relationships with clients and help clients gain clarity and purpose on what they'll do in retirement. That, in turn, could help create a more accurate and relevant financial plan that reflects individual lifestyle, goals, and financial needs.

People often fail to plan for the nonfinancial side of retirement, Lawrence said, because they've subscribed to some myths about retirement. Among the most common, he said, are:

  • I'll just sit and watch television and play golf all day.
  • I'll figure it out later.
  • I've saved enough money. What else matters?

"When I give workshops, I ask: 'How many of you have a life plan?' I'm lucky if 10% of the audience raises their hands," he said.

"People don't spend a lot of time thinking about and planning for the nonfinancial aspects of their retirement," he said. "They don't realize it's the biggest transition they'll ever go through."

The consequences of not planning can include sitting around with growing boredom. Retirees watch TV an average of 43.5 hours a week, according to Age Wave 2012, and Lawrence associates lack of stimulation with higher risk of alcoholism or depression.

Learning what clients plan to do after they retire can also help you shape their financial plan.

"If a client tells me they're thinking of retiring soon, I'll ask them what they'll do then," said Jan Towne, CPA/PFS. "'How will you fill your days? Will you travel extensively? Do you plan to buy a second home?'"

It's also key to know whether clients plan to work in retirement. "If someone is planning to work part time, that tells me two things: how they'll spend part of their days and how they'll manage their money," Towne said. "It's a steppingstone to the financial plan, because if we don't know how they'll fill their days, we don't know what their cash flow needs will be."

Asking about the nonfinancial side of retirement can also help you build a stronger relationship with your clients. That, in turn, can differentiate you from other advisers and inspire client loyalty.

"You want them to say: 'You care about me as a person. It's not just my money. And you know me better than any other financial planners know me,'" Lawrence said.

The keys to a great retirement, Lawrence said, include clarity of purpose, well-being, connectedness, giving back, and pursuing one's passions.

Creating a meaningful retirement

Retirement and career coach Barbara Czestochowa has a new term for retirement: Refirement.

"People who can find real purpose in that period of time are much happier," she said. "They might contribute to family, to the community, volunteer, be involved in a spiritual community. They might pull back and think about their spiritual roots, meditate, pray, read enlightening books that give them a purpose. And they might keep learning, stimulating their brain, and staying connected, as well as taking better care of their physical health once they have more time to do so."

As a trusted adviser, you can talk with your clients about the many possibilities for them to pursue their purpose, and explore what interests them most.

One idea to share with retiring clients is the bucket list. Czestochowa advocates putting together a bucket list, but not just one. "Create a bucket list for this year and another for next year," she advised. "An old friend introduced me to bucket lists years ago. She was on her fourth or fifth bucket list."

How CPAs can help

CPAs can help by asking clients what they're most passionate about and how they might follow those passions once they have more time.

Questions––derived from Your Retirement Quest––that can help clients explore these topics and plan effectively for retirement include:

  •  Is there something missing from your life that you can pursue with more available time?
  •  Are there activities that you're deliberately doing now and planning to do in retirement that can help you gain and sustain energy across four dimensions: physical (active, healthy); emotional (positive, appreciative); mental (new, stimulating); and purposeful (caring, doing meaningful things)?
  • Do you feel connected to family, friends, acquaintances, and groups? What can you do to feel more connected?

You can also look for opportunities that lead into deeper conversations. For example, when working with a couple, ask probing questions and listen closely to what each person has to say about goals and priorities and how that might affect their lifestyle and finances.

As a trusted adviser, you have unique ongoing access to your clients' personal lives, and a natural focus on their lifelong financial well-being. By expanding your role and your focus, you can potentially help your clients get more out of their remaining years just as you seek to help them remain financially healthy.

For further reading

In addition to Lawrence's book, Your Retirement Quest: 10 Secrets for Creating and Living a Fulfilling Retirement, Czestochowa also recommends Falling Upward: A Spirituality for the Two Halves of Life by Richard Rohr, and The Gift of Years: Growing Older Gracefully by Joan Chittister.

Allan Kunigis is a Vermont-based freelance writer. To comment on this article, email senior editor Courtney Vien.

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