Updated on: November 6, 2023

Setting goals for life after retirement can be difficult. Our goals and values change, the thought of retirement may be emotionally charged, and we may not know what’s financially possible for our future self. In most instances, clients simply don’t know what retirement looks like.

That’s why goal setting is important in the financial planning process. By helping clients set specific, achievable goals, planners can help clients actualize their retirement and break down common barriers to living a full life after retiring.

Exploring Interests Before Retirement

Starting the conversation about retirement lifestyle can be pretty simple, but it’s important to take the time to initiate these conversations. Clients may only have a vague notion of what they want for retirement. They may also have misconceptions about what it takes to retire.

Simply asking clients questions to get an idea of how they’d like to spend their time will allow you to start approximating costs. You can ask questions like:

• What do you like to do now?
• What do you wish you had more time for?
• Where are you going to live?
• Where do you like to visit?
• Where would you like to go?

The answers to these questions can help you paint a more detailed picture of what a client’s retirement may look like, which can be refined over time as they get closer to retiring. Importantly, these conversations can also uncover common retirement misconceptions.

For example, many people believe they need a million dollars to retire. In some instances, clients won’t need this much to retire, and in others, they’ll need more. Clients may be impacting their current or future lifestyle based on what they believe to be conventional wisdom, even though it does not fit their circumstances.

In the course of your retirement conversations, especially after you’re able to approximate retirement lifestyle costs, you can address these types of misconceptions and help guide clients toward a more accurate savings goal.

Present Self vs. Future Self

Part of what makes thinking about retirement, and making smart financial decisions for retirement, difficult is the conflict between the needs of our present selves and future selves. Research shows that we tend to think of our future selves in the third person.¹ In other words, we view the needs and wants of our future self similarly to the way we would view a stranger. This disconnect to our future selves can lead to suboptimal planning for our retirement needs.

One powerful way to help clients better prioritize present and future needs is to have a “vividness intervention.” Research shows that these interventions are effective in visual or imaginative formats, so you could do things such as:

• Use an aging app to present clients with a photo of what their future self may look like
• Ask clients to write a letter to their future self
• Get detailed about specific future plans (list actions to take today to positively impact clients’ future self)
• Have clients put themselves in the shoes of a loved one who is near retirement

All of these activities can help clients empathize with their future selves by emotionally connecting to their circumstances. They encourage clients to think more deeply about their future lives and connect the dots between their present actions and future consequences.

Helping clients do this kind of work can go a long way in helping them actualize their best retirement.

Timing the Conversation

Financial professionals should take responsibility for getting retirement conversations started. They should also understand the right time to cover this subject.

Life events happen all the time and can be very stressful—anything from moving to divorce to a major illness could shift the trajectory of someone’s life. Big or small, these life events require some degree of social readjustment and impact the way we think about our present and future selves.

When we’re undergoing a readjustment or transition, we’re not fully available to make the best decisions. We may be too heavily influenced by emotion, leading to regret down the road.

Financial professionals should wait until a relatively calm period in someone’s life, if possible, to get these conversations started. You’ll find that clients will be more receptive and introspective in their thoughts about the future if they’re not distracted by the present.

When clients are presented with the ideal conditions to envision their future, the resulting plan has a better chance of closely aligning with their true desires.

Life Transitions After Retirement

Regardless of when clients retire, there will be a number of life transitions they go through after this happens. Some of them will happen fast and some will happen slowly over time, but life will be very different.

Continue learning on this topic by registering for our CE webinar Flipping a Switch: 24 Later Life Transitions and Action Steps for Happiness and Financial Security to help clients live their best life in retirement.

Sources:

1. Hershfield, Hal E., Elicia M. John, and Joseph S. Reiff. “Using Vividness Interventions to Improve Financial Decision Making.” Policy Insights from the Behavioral and Brain Sciences 5 (2), 2018: 209–15.

DISCLAIMER: The eMoney Advisor Blog is meant as an educational and informative resource for financial professionals and individuals alike. It is not meant to be, and should not be taken as financial, legal, tax or other professional advice. Those seeking professional advice may do so by consulting with a professional advisor. eMoney Advisor will not be liable for any actions you may take based on the content of this blog.

You may also be interested in...