Retirement Planning: Psychological Issues Faced Upon Transition

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Thinking.
Adapting.
Advising.
For your life and legacy.
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AICPA PFP Section Retirement Planning
Psychological Issues Faced Upon Transition Tom
Walsh, PhDGrenell Consulting Group Ted
Sarenski, CPA/PFS, CFP DBB Financial
ServicesSeptember 2007
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The Softer Side of Retirement Planning
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• We work hard to make sure our clients are
  financially secure, but are they emotionally
  secure?
• What are their fears for the upcoming years?
• Have they planned for their retirement years as
  well as they have planned for their working
  years?

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Helping our clients embark on a new career
Retirement
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Goals for Today

• Discuss Retirement Planning as part of Financial
  Planning
• Discuss hard/soft aspects of Retirement Planning
• Your role as financial planner Are you a
  product seller or are your products part of an
  integrated life-process for your clients?

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A Little Background

• More than 70 million baby boomers will begin to
  retire soon
• Retirement can last 30 years or more
• Phases of retirement
• Active
• Less Active
• Most people know what they are retiring from, but
  not what they are retiring to--only a small
  percentage have a life plan for retirement

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Life Planning for Retirement

• People are stuck in old model of retire, get
  sick and die. Few plan for the healthy, active
  stage of retirement.
• What am I going to retire to?
• The soft side of retirement planning is to engage
  the client in a thoughtful process of what they
  want to do, be, and accomplish in the next phase
  of their lives. We want to assist them in
  thinking through a plan deeply until it
  represents them completely. And we want the plan
  updated yearly.

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Balanced Portfolio in Retirement Planning

• Travel
• Family-kids, grandkids
• Residence, one, two? Near kids?
• Work
• Hobbies, recreation
• Volunteer
• Learning
• Health and fitness
• And? What is important to the client

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One Page Retirement Planning

• What?
• Why?
• Can it be bolted on to hard financial planning?

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One Page Retirement Planning

• Vision-What kind of retirement do you want over
  the next three years
• Mission-What is the purpose of your retirement
• Objectives-What are the specific results you
  would like to achieve/measure over the next three
  years
• Strategies-How will you go about meeting these
  objectives
• Action Plans-What is the specific plan to meet
  the objectives

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Vision Redo every 3 years
What are you retiring to?

• Use the balanced portfolio questions plus
• Review your life. What is left undone? What
  have you always wanted to do but not done?
  Cruise, motor home, travel, play golf, tennis,
  scuba?
• Think it through carefully with the client(s)

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Mission

• What is the purpose of your retirement at this
  phase?

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Objectives

• What are the specific goals that you have for
  this next year of retirement? Be specific-how
  could you measure?
• Family goals
• Travel goals
• Financial
• Volunteer
• Learning
• Reading

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Strategies

• How will you meet your objectives? What kind of
  plan(s) will take you toward your objectives?

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Action Plans

• What are the specific plans to achieve the goals?
  Be specific here.

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Vision

• During the first 3 years of my retirement I plan
  to detoxify from my work, engage in new
  activities, deepen my relationship with my wife
  and my children and improve my health and
  activity level. Thoughts for the next 3
  years-volunteer, grandchildren.

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Mission

• Let go of work, embrace health, family and
  activity

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Objectives

• Take 3 two week trips with my wife, Barbaraone
  within one month of retirement and the other two
  within the year
• Plan and take a two week trip with kids invited
  for all or part of the timewithin 9 months of
  retirement
• Take 8 golf lessons within the year and lower my
  handicap from 22-17
• Reduce my weight from 185 pounds to 165 by year
  end
• Read two books per month, one fiction and one non
  fiction

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Strategies

• Barbara and I will engage in a planning process
  for our trips and map out each one, including
  options for the trips with kids
• I will join Radisson golf course, take lessons
  and join at least one league. Barbara and I will
  join a couples league
• I will join a gym that caters to retirees and
  consult with a trainer and map out a
  health/fitness plan
• I will spend time at the library scouting out
  books that interest me

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Action Plans

• We will have at least one trip agreed upon and
  planned (1.31.08)
• We will have informed the kids of our plan for
  two week family tripwe will pay for everyonea
  family task force will plan the trip to be
  completed by 9.1.08
• I will investigate golf course and leagues by
  3.15.08 and sign up for golf lessons and
  activities by 5.15.08
• I will have joined a gym, consulted trainer and
  begun my fitness program by 1.15.08
• I will have read my first two books by 1.31.08

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Ways People Approach Retirement

• Continuers-Continue using existing
  skills/interest
• Adventurers-Start entirely new adventures
• Searchers-Explore new options - trial error
• Easy Gliders-Let each day unfold
• Involved Spectators-Care deeply about world but
  engage in less active ways
• Retreaters-engage less in life
• Dr. Nancy Schlossberg

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A Couple of Scenarios
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Scenario One

• Jack is a small business owner who started his
  own company at age 24 with a few dollars and now
  has a net worth of over 4.5 million dollars
  consisting of liquid investments of 2 million,
  buildings and land of ¾ million, the business
  value of 1 million, ½ million cash value life
  insurance and personal effects and toys of 1/3
  million. He is 64 years of age this year and has
  his two sons working in key roles at the
  business they are age 40 and 37. Jack owns 100
  of the stock in the business, 100 of the real
  estate the business is located in and feels that
  most of the time he cant allow the boys to
  operate the business alone because they just
  dont operate it the way he has all these years.
  He is single with no significant other.

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Scenario Two

• Sarah is a physician in an eight physician
  internist practice that does not have any buy-out
  provisions other than each partners share of the
  accounts receivable. She is 62 years of age and
  wishes to continue working part time until age 66
  when she is eligible for her full Social Security
  benefit. Sarah has accumulated 3 million dollars
  in the practices pension and profit sharing
  account, has a home worth ½ million with no
  mortgage, personal effects and no after tax
  liquid investments to speak of. She is an avid
  tennis player and hiker in the Adirondack
  Mountains. Her husband Bob retired this past
  year and receives a small pension from his former
  employment. They have 3 adult children Bob Jr.
  who is married to Jan and they have one child
  Jennifer, Jill and Meghan who are single.

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Tom Walsh, PhD Grenell Consulting
Group 315.451.9293 tcwalshphd_at_grenell.com www.gren
ell.com