If a person with a million dollars can’t retire comfortably, what hope could the average person possibly have? “Plenty,” according to columnist Paul Farrell in a Marketwatch.com column entitled “Yes, You Can Retire on $22,000 a Year.” Farrell reports on people enjoy- ing ribs and corn at Warren Buffett’s annual Omaha barbecue—many of whom are living comfortably on $15,000 to $30,000 a year, and still saving lots of money. Of course, these people have little debt, but there are many examples of multimillionaires living on as little as
$15,000 a year. As one semi-retired client told us, “Money tends to lose its meaning as you age, and you find yourself being content with the basics—good health, good friends, shelter, and food. If you have enough or a little more than enough, you take pleasure in that.”
Ralph Warner, author of Get a Life, You Don’t Need a Million to Re- tire Well, found that when he asked retirees why they were happy, money wasn’t high on their list of concerns. Instead, Warner found a direct correlation between a midlife obsession with work and savings, and an unhappy retirement. Warner also discovered that content
“seniors spent their middle years investing in themselves—acquiring the skills, connections, and an outlook that made the free time of re- tirement a good time.” Warner advises: “Think about the kinds of work that you’d do for the sheer joy of it if money ceased to be the main motivator, and start planning now to make the transition to part-time work in that field. In short, the more interesting you find yourself, the more interesting you’ll find retirement.”
It is precisely this idea that may render the 70 percent rule ob- solete in the lives of future retirees—if that 70 percent is based only upon Social Security, pension, and investment incomes. Many will re- tire early, engage in interesting part-time work, and make up any pos- sible shortfall from investment income. Some of these people will aim for modern retirement when they have enough to draw 30 per- cent of their current income off of investments—not 70 percent. It is important for advisors to learn what their clients want, and to be flex- ible when it comes to creating a patchwork of finance solutions to help clients get the lives they desire.
We have heard many clients bemoan the fact that when they told their advisor of their plans, for instance, to change to a lower-paying, slower-paced career, that they sensed a tacit disapproval coming from their advisor. As one client put it: “I felt like he was looking at me thinking, ‘How could you leave this kind of money?’ I just wanted to move on and have a life. I wanted help in rearranging my money to make that life possible.” To facilitate the needs and wants of the
14 / Offering Guidance in Times of Career and Retirement Transitions 151
modern client, advisors must—to borrow a worn out phrase—think out of the box. The rule of the box is to keep doing what you’re doing to earn as much as you can to be able to do what you want at retirement age. The new rule for the age we live in is do whatever you can to have the highest quality of life now while also preparing for the future.
Yes, today’s clients really do want to have it both ways. They want to enjoy the present and the future. While the old model exhorts us to sacrifice the present for the sake of our future, today’s clients feel uncomfortable deferring all the pleasures of life to an uncertain fu- ture. Today’s advisor must possess the flexibility to allow clients to define what they want out of the present and the future, and facilitate the financial processes to make it happen. This will require loosen- ing our grip on old retirement “gap” models and restraining judg- ment and biases based on outdated ideas regarding retirement.
The goal of financial life planning is to help the client achieve quality of life in a resourceful manner—and as soon as possible. This ethos will inevitably supplant previous planning models such as hav- ing x dollars by age y, as such a goal may in fact be an impediment to achieving true wealth in one’s life. Life is unpredictable. Vicissitudes visit with no warning flares. Life continually offers us opportunities to examine the roads we are traveling and to change our course.
Advisors who can demonstrate that they can think out of the box and possess the necessary flexibility to help clients who want or need to change courses will gain reputations as financial partners and guides, as opposed to conventional brokers or planners. Just as one size does not fit all, neither does one plan fit all lives. The public is waiting for a group of advisors to step forward and tailor their ser- vices to individual lives, instead of trying to stuff individual lives into prefabricated career and retirement models. This will require that we know the transitions our clients are contemplating and do what- ever we can to help them make those transitions. Anyone can tell them, “It can’t be done.” It takes creativity and genuine interest in the clients’s well-being to help them find that quality of life now as well as in the future.
In the next chapter, we will examine how you can help your clients, retired or preretired, move from making a living to making a difference.
C h a p t e r
15
The last stage of life is either spent in integrity or despair.
You will not despair if you believe your life has meaning.
—Erik Erikson
We cannot live the afternoon of life according to the pro- gram of life’s morning.
—Carl Jung
Bill is a senior level executive at a Fortune 500 company. After reading The New Retirementality, he shared his vision of retirement with me. Because both he and his wife had saved well, he will be able to “retire” in his mid to late 50s. He has also embarked on a three- year course to receive the Certified Financial Planner (CFP) designa- tion. His plan, once he receives his CFP, is to open up a practice that caters to those who typically cannot afford such services. He related an incident that set his mind upon this unusual career transition.
Bill was helping a young single mother with her taxes when she told him of a breakthrough in her life. This young lady, who earned no more than $15,000 a year, had told him with great pride how she had just paid off her last debt and how free she now felt to be able to pursue her dreams. Bill said this story touched him in a deep and meaningful way. It helped him to grasp how relative numbers were 153
Leaving a Legacy
and how meaningful it was to gain complete control of one’s finan- cial life—whether you earned $150,000 or $15,000. He immediately recognized the dilemma that accompanies lower wage earners: these individuals can hardly afford financial advice, and few advisors are willing to work with individuals with such meager assets.
From this experience and realization, Bill’s dream of becoming a “charitable advisor” was born. He plans on working on a sliding scale for those who can afford to pay so the individuals have some- thing invested in the process. He also plans to provide services to those who need help but have no payment to offer. Bill has always been interested in financial matters and his faith has always been im- portant to him. He is interested in having a positive and meaningful impact in our society. Now he has set on a course that will integrate these goals and values. Bill has found a way to leave a legacy.