by Cathy Miller, MBA, CFP®, CRPS®, CDFA™
Are you a “Baby Boomer” – a member of the demographic group born post-World War II between 1946 and 1964? This group of Americans has had a profound impact on U.S. society at every stage of life. That impact has been in part due to the sheer size of this group, which peaked at nearly 79 million (including immigrants) in 1999, according to the U.S. Census Bureau. It is also due to Boomers challenging many aspects of traditional society and values. In particular, Baby Boomers brought about dramatic changes in the way we work in America, from the roles of women in the workplace to how both men and women viewed careers and work. Boomers are working longer and living longer, dramatically altering how people retire and how they live in retirement.
With 10,000 Baby Boomers reaching age 65 each day between today and the end of 2029, the financial services industry needs to respond with new ways to help this vast wave of retirees transition successfully into their post-work life. Traditionally, financial advisors have focused most of their efforts on helping individuals save money and accumulate wealth for retirement – the “accumulation” phase. Once savings goals have been met, some advisors then shift their focus to helping individuals invest and spend safely in retirement, or the “distribution” phase of their financial life. What has been missing is a focus on the process of RETIRING. The process of retiring can be confusing, overwhelming and even scary. We hear from clients that it can feel a bit like leaping off a cliff, and not knowing what lies below. And if you aren’t sure you are READY to leap, it can be even scarier.
What makes the process of retiring so daunting? The current process for many looks something like this:
Without expert guidance, the typical retiree is left to gather information from a variety of disjointed and sometimes not-completely well-informed sources. Human resources officers generally are a good source of information about options for retirement plan distributions, but lack knowledge of your total financial situation and are often reluctant to provide advice due to concerns about liability. Contacting Social Security for guidance can be an extremely frustrating and confusing process as well, as representatives often struggle to understand and explain basic rules or recent rules changes, and lack the knowledge and perspective to provide recommendations tailored to your specific circumstances. Your tax provider can provide helpful tax advice, but probably doesn’t have the knowledge of your full picture to provide guidance in other areas. Perhaps the most confusing area of all to navigate can be health insurance. Understanding your options under COBRA, retiree health insurance, the health insurance “market place” and Medicare is a daunting task indeed, where your sole source of guidance is often a commissioned health insurance broker. And even if you succeed in getting good advice about each of these separate areas, there is no one creating a coordinated game plan and reconciling any conflicting pieces of advice.
At AFA, we decided that there just had to be a better way. Instead, we guide clients through the process of retiring using a 25-step process called “Retiring FITT.” Our process is designed to give clients the confidence that all the critical issues that need to be considered have been addressed, and that they have a customized plan designed to help them reach their unique goals and objectives. Because so many of the decisions being made are irrevocable, thinking through all the options and developing a coordinated game plan is critical to a successful retirement. The path to Retiring FITT, as we have designed it, looks like this:
Not all steps apply to everyone, but by following this process we can be sure no important decisions have been overlooked and that all pieces of the retirement puzzle work together smoothly.
The challenges in preparing for a successful retirement aren’t just financial either. Once all the right decisions have been made about things like retirement plan rollovers, pension distributions, Social Security filing strategies, and health insurance, there is no guarantee that the best laid plans in the world will lead to a happy and satisfying retirement. Without adequate thought and planning, retirement can cause significant stress and even depression. Divorce in retirement or among those 65 and older is rising, too. Just as Baby Boomers have challenged and changed the way we work, they also are demanding more from retirement. That is why defining your exact retirement vision is a critical part of the process. We spend time upfront helping you decide on important aspects of that vision, such as:
Housing - Is relocating or downsizing right for you? Is an over-55 community or a multi-generational setting right for you? Do you and your spouse agree? Have you fully incorporated the financial changes related to your choice into your plan? How will you know if the move is right for you, and what will you do if it’s not?
Travel – Is a travel “bucket list” a priority for you and your spouse? Will your health allow this now or in the future? Have you adequately considered the costs in your plan?
Purpose - How will you replace the sense of purpose and identity work provided? Will part-time work or volunteering be part of your life?
Relationships – How will you stay connected to friends and colleagues from your work life – or do you want to? How will you meet new friends (especially if you are relocating)? Do you and your significant other agree on how much “togetherness” and independence you each need?
Once all the possibilities have been imagined and discussed, we help clients create their unique vision for retirement. We even offer workshops where single or coupled clients can work through these “softer” components of retirement readiness that are vital to a happy retirement.
At Atlanta Financial, we are committed to making life’s journey richer for our clients through our Retiring FITT process.
To learn more about Retiring FITT, click the button below.