7 Steps for Re-Thinking the Third Phase
The drum is beating…a persistent sound that is getting louder and more urgent by the day. Now, more than ever, hundreds of thousands of Americans are facing an unknowable, unpredictable and frightening future.
Most of us, as professional advisors, are aware of the economic issues surrounding this significant shift. In early 2012, the Employee Benefit Research Institute reported that only 52 percent of Americans were confident that they will be comfortable in retirement, while twenty years ago, that number was close to 75 percent. The numbers remain dire. Most of those approaching the age of potential retirement have less than $10,000 in savings. Studies by numerous organizations, such as GoBankingRates and Google Consumer Surveys agree that over 30% of the adult population have nothing.
The message to increase retirement savings and plan more effectively for the future has been a consistent theme that is garnering a lot of press. However, we seem to be failing to address the underlying, emotional and psychological issues that can make this transition extremely difficult. For some entrepreneurs, this “third stage” of life, rather than being a shining cap on a remarkable and rewarding career, becomes a downward spiral of defeat.
Research from the Institute of Economic Affairs suggests that while retirement may initially benefit health – by reducing stress and creating time for other activities, the benefits may wear off quickly. In fact, the study found that retirement increases the chances of suffering from clinical depression by around 40%, and of having at least one diagnosed physical illness by 60%.
Without a significant shift in our attitudes and actions in working with and supporting this growing demographic, the economic impacts for our communities will be overwhelming as an unprecedented number of our older citizens find themselves falling into poverty and/or emotional despair.
To change the tide, we need to change the conversation. First, we must recognize that this is not just an issue of money –but rather an issue of culture and psychology.
Charlie, a 67-year-old business owner, with a solid management team and the financial wherewithal to leave the business and begin a new life, struggles to find the right moment or take any of the preparatory steps.
I know I have managers who want to step in and take over. I know that the company is ready to run without me…but I can’t leave. I am afraid that I am going to stick around until people are just sick of me, but I still can’t leave. There is nothing else for me.
We could tell hundreds of these stories. So, what role –as advisors, confidants, experts and friends– do we play? How can we help to turn the tide of fear, uncertainty and confusion?
Below are 7 steps that you can take with your clients to guide them through the retirement planning process, including a table exercise available in the Tools section of the Resource Library.