As long as you don’t have money issues, retirement is great…

Until you realize you have reorganized your spice drawer a second time. And you aren’t traveling as much as you used to. And your health is deteriorating.

Hopefully, a lifetime of working and saving in one form or another will pay off for investors, and retirement will become the long and fruitful final stage of that person’s life. According to Spectrem’s new study on affluent investors in retirement, the days of relaxing and doing exactly what you want with your time goes beyond expectations for most people.

But aging affects everything in life, and that includes the relative peace and calm that comes with retirement.

Spectrem’s study Financial Wellness in Retirement includes a quantitative report on how older retirees compare to those who are relatively new to retirement. It also includes a qualitative report with one-on-one and focus group interviews in which older retirees discuss their health concerns, their newfound money concerns, and what they do with their time now that travel is not as frequent as it once was.

“There is one aspect of working that is often forgotten; it fills up your day,’’ said Spectrem president George H. Walper Jr. “Retirees told us of their traveling and their volunteer work that keeps them busy in retirement, but we also heard about the negative effects that come in a lengthy retirement, and the research backs that up.”

Spectrem’s study compared responses from three different sets of retirees: those who have been in retirement 20 or more years, those who have been retirement 10-20 years and those who have been in retirement less than 10 years. While their responses about life in retirement are similar, those with the longest time in retirement are slightly less enthusiastic about it and slightly more worried about issues that come up with retirement and older age.

The study asked retirees to consider 10 topics as their “biggest challenges in retirement” and the retirees with more than 20 years in retirement most often selected “budgeting my money” (13 percent), “having to leave my current home” (20 percent) and “how much to leave as an inheritance to my children” (8 percent).

While the percentages are not high, they are higher among the retirees who have been retired the longest, and advisors need to make themselves available those retirees because in each case, the problem can suddenly crop up and investors may not consider turning to their financial advisor for assistance, since the problems don’t directly involve investing.   

Retirees 20 years into their retirement have another characteristic which affects their attitudes and behaviors. After the initial thrill of being able to travel whenever they want to wherever they want, retirees eventually get too old to travel as much, or slow down a bit in their lifestyle. The Spectrem report shows that 39 percent of investors who have been retired 20 years or more travel less than they did before their retired!

As a result, they have more time on their hands to worry about other matters in their life, and finances often become that go-to topic. 

It is safe to assume that investors more than 20 years into retirement are getting into their elder years and looking for all sorts of help with issues beyond financial. That’s why the 20-plus years group of retirees report more family involvement in their life than those retirees who have not been retired as long.

Advisors are regularly advised to get to know the close family members of their clients because those family members can be influential and can also provide new business. When it comes to retirees, family becomes increasingly significant, and advisors with family contacts will be ahead of the game.   

The post-retirement market for clients, however, is a tricky one. According to the quantitative insights from the report, only 55 percent of those investors retired more than 20 years who use an advisor use the same advisor they worked with to plan for retirement.

Top Takeaways for Advisors

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Investors spend so much time with their advisors worrying about their preparation for retirement that once they retire, they can become an afterthought. Their income streams are set, they are often young enough to have interests beside managing their money, and so they don’t spend a lot of time talking to their advisors about their finances. As a result, advisors forget to consider their post-retirement client base as a population for further investments or consultation.

 

However, as retirees go through the final stage of their lives, new topics continue to crop up, and many of them are financial in nature. Therefore, advisors should make regular contact with their retired clients to make sure their financial needs are met.    

 

 

©2017 Spectrem Group