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Comment: Retirement planning – far more than number crunching

17 October 2019

How does our identity change when we retire? And what does this mean for paraplanners putting together a financial plan? Jacqueline Lockie, head of Financial Planning, CISI, considers some recent research.

First published in the October issue of Professional Paraplanner

You may have seen the recent research publicised on BBC news channel on 20 August entitled “Why we lie about being retired”.

The article talked about the findings of four years of research by Professor Amabile at Harvard University in the US. Her team interviewed 120 individuals at different stages of life in various parts of the US and talked to them about their perspectives about retirement. As you’d expect, retirees started off relaxing and enjoying being retired, but the shine soon wore off.

The study identified that many people do not envisage what life would be like when they actually retire. One reason suggested for this was that the financial planning that goes on prior to retirement seems to be viewed as more of a mathematical exercise of crunching numbers to ensure the retirees have sufficient money to live on when they reach retirement.

But as we all know from creating financial plans for clients, doing the number crunching is just one part of the process. Getting the client to imagine what life would be like when they retire is something I don’t often see talked about in client meetings or written about in financial plans.

Imagine this scenario, you are retired, it is a rainy Tuesday afternoon, what are you doing? Having a doze whilst watching Midsummer Murders or doing something a little more exciting? Having a doze is all well and good for our health, but perhaps not on every rainy day.

One of the most interesting things about this research was they found when they asked retirees what they did for a living. Most said, “I’m a retired…librarian/bio chemist/banker…”. They didn’t just say that they were retired, they all added their previous job to the statement. The researchers suggested that we do this naturally because we seek some sort of identity when retired.

But would a client really need to add their previous job title when retired if they felt their life post full-time work, had value and meaning? As paraplanners you are in the ideal position to ensure that the financial plans that you create for clients help them see how they might live a long and fruitful life in retirement.

The research also went on to comment about the economic factors at play and it made me think about the potential impact on cashflow planning.

As Governments around the world but particularly in Europe, start extending the normal retirement age, how might this impact those who are planning for their retirement in less than ten years’ time?

It lead me on to think about what many of my own clients used to do for a living before they came to me for advice. If, like me, you write financial plans for white collar workers, consider whether they have always undertaken roles like that. If, like some of my old clients, they started work as a manual worker before starting their own business, it might be that extending their retirement age to allow more time to meet their objectives, might not always work well. Some might suffer more ill health as an effect of previous occupations. So understanding about a client’s entire working life is important.

We all know that if we use the client’s own words and terminology when writing financial plans for them, this makes it personal to them as they can see themselves reflected in your words. Their goals and objectives are brought to life. But research shows that when it comes to retirement, there is more that we can do to show clients what that could really feel like.

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