The Oh Sh*t Moments of Retirement Planning


My work with consumers, clients and advisors over many years revealed to me three groups of retirees. The first are those who are “ready”. The second are those who are screwed. The third are those who are screwed up but don’t know they are screwed up.

Consider the remarkable yet mundane story of Amy Goyer, told recently in the Wall Street Journal. A longtime AARP executive, she is an expert in understanding longevity and planning. She knows the pitfalls that too often overwhelm hopeful retirees and upset their plans. And yet she, too, succumbed to a myriad of unexpected demands to care for her aging parents. These demands led to his personal bankruptcy.

Her story is notable for her selfless candour and willingness to share her experience. And it’s banal because it’s so common.

The human brain is not naturally wired for long-term planning. It is a scientific fact. Most people suffer from what Nobel laureate Daniel Kahneman calls “narrow framing,” which is the tendency to downplay the size and scope of situations and therefore fail to see their full implications. We see the tree. We miss the forest.

But even when we plan, retirement planning relies on predictions, many of which are spitball guesses for most people. Do you have enough money for your retirement? How do you know unless you have a fortune (most people don’t) or have an accurate reading of all your assets and benefits (after tax please), prices future assets, the rate of inflation, your retirement health and your expected date of death. Wait, we also need to know if you will be responsible for anyone else in this retreat. And for how long. And how much will it cost.

Because most people won’t be guessing accurately when answering these questions, we need to adjust the vision of our roles and think of ourselves as ‘retirement recovery specialists’. I don’t think this name is a marketing stunt, and it will be improved upon by more creative people than me. The bottom line is that we need to end the stigma of those who are unprepared and just assume that everyone else is. Even multi-millionaires can find themselves trapped in lifestyles they can’t afford or face life-altering health crises. Equally likely for the wealthy is the need to find meaning, a new chapter, or risk boredom and loneliness. Retirement isn’t just financial, it’s emotional.

If we are to be good at this retirement recovery role, we must be prepared like ninjas for common planning challenges.

Advisors are very often confronted with “moments that matter”. By this I mean the critical situations that clients or their families find themselves in when they need essential help. Very often the advisers only get involved and try to catch up with the train that is already leaving the station.

I spoke with other counselors and we discussed what those moments are. The following stories emerged from this research.

An unexpected health event
I vividly remember a client of my company named Sue, whose husband only missed one day in 33 years at John Deere. He collapsed at a pro-am golf tournament and was told he had a brain tumor. He had never worked closely with a financial adviser and now Sue needed help. Their advisor, my colleague Alicia, met with Sue and five of her friends, all of whom had similar situations. Alicia acquired them all as clients. But the starting point was the establishment of reliable contact details, powers of attorney and medical proxies. None of the five families had these basic documents in place.

Difficulty making financial decisions
Another colleague of mine, an advisor named Christian, had a long-time client who always drove to his office. But one day, she confessed to him that she no longer remembered where she had parked. And it wasn’t the first time. Christian assured her she was safe and he contacted his son who lived nearby. Additional measures recommended by Christian included a fraud monitoring service; an updated power of attorney; and updating other documents, including the living will. Christian now works closely with both sons.

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