MONEY matters

Mark Zaifman's thoughts on money, global economic trends and politics

Boomers in Their Early to Mid-60’s Are Heading For the Exits

Mark Zaifman   |    Tue, May 05, 2020 @ 12:57 PM

exit sign

'We’re all in the same storm, but not all in the same boat’

I have read so many good quotes lately that I am not sure where the one above came from, but it certainly speaks volumes.

Twice a month, beginning in mid-February, I've been attending Zoom meetings with other financial planning colleagues from around the country.

While the main focus has been on the stock and bond market, the most prevalent trend we have all noticed is the amount of baby boomers in their early to mid-60’s wanting to retire by the end of this year (2020).

The uptick in the amount of clients wanting to develop exit strategies if they own their own business or develop retirement income plans is not surprising given the health crisis that most likely will be with us for the foreseeable future as well as the economic outlook.

From these calls with other colleagues, the question most of the boomers are asking is the most obvious one:

Given the recent market downturn and the hit to my portfolio, do I have enough assets to retire at the end of the year without having to make major lifestyle changes to our initial financial plan?

It is important to point out the following and lend some context to our ongoing client conversations.

The calls I have personally received over the past few months have been from clients that were planning to retire 1-2 years from now.

Comparing notes during our Zoom meetings, my colleagues and I discover most of these clients looking to retire at the end of this year were in a financial position to retire a few years ago. Most if not all have been intentionally extending their date of retirement for various reasons.


When a Joint Retirement Vision Collides with Reality

It is one thing to visualize your retirement years as a couple when retirement is 5+ years away. It is another thing entirely when that date has suddenly been moved up to the end of this year. Now it is no longer a what-if scenario we are modeling, it is real and it is really happening.

Although it seemed you and your spouse/partner were on the same page regarding your lifestyle in retirement when looking at hypothetical financial scenarios years away, many couples are suddenly discovering that is not the case now that retirement is coming into clear focus.

One person may see retirement as a time of leisure, travel with their spouse at their side, living the same lifestyle and same location that they have for years. This is certainly the way the ads for financial services portray it.

Where we as financial planners often fall short is focusing only on the ‘joint retirement vision’, without adequately projecting the reality of what may await women in the later phases of their lives, especially since women traditionally tend to live longer than men.

That is why it is more crucial than ever, particularly if you are now part of a couple, that your retirement planning addresses both the 'his' and 'her' sides of retirement.


Retirement Planning and Leveling the Playing Field

Maybe you are one of those couples where the higher earner in the relationship has more often called the shots in terms of spending and major lifestyle decisions. That is an all too familiar pattern for many couples and usually works without much acrimony.

Fast forward, and now you are both retired, the higher earner is no longer the top dog in terms of money making, so to speak, and the playing field has been leveled.

Perhaps before, when there was a disagreement or conflict in terms of money, the high earner won out. Now, moving forward and for the rest of your lives together, if you say yes and your spouse says no, its back to the negotiating table you go.

That is because in your post-retirement world as opposed to your pre-retirement world, the new rules of the road require you both say yes to a money/spending decision. What will no longer be sustainable is you say yes, your spouse says no, but you still ‘win’ the discussion because you used to make more money and that is the way it’s always been. Those days are over.

For those in a relationship that have been used to getting their way when it came to money decisions, learning to negotiate with your spouse/partner, learning to see her/his side when it comes to spending or saving, seeking to understand before you are understood, these are going to be the skills you’ll need to sharpen and perhaps relearn in some cases.

If you are saying to yourself that concept sounds good for other couples, but that is not the case for us as my spouse is used to me making the money decisions, please reconsider.

You may have made the bulk of money during your working years and as a result, contributed far more to your overall savings than your spouse, but that is the past. It is the present and the future that matter most now.

And once you retire, if you still believe there is no need to change your money habits, please remember, grey divorces are increasing rapidly around the world. So would you rather sit around the kitchen table and compromise with your spouse, even though that may feel uncomfortable at first and perhaps bruise your ego, or would you rather sit around a conference room table at your lawyers office splitting up your assets?


The Art and Science of Retirement Planning

If you are a couple nearing retirement, even if one of you or both of you are DIY’s when it comes to managing your money, you owe it to yourself and to your future happiness and financial well-being to seek an independent and objective second opinion regarding your personal finances.

There are holistic financial planners that work in a fiduciary capacity all around the country and most work on a fee-only basis. The benefit is not only peace of mind, but also, it may be the first time you discover your spouse has a totally different vision of your retirement years than you do. The sooner you find that out, the higher your odds are of a successful launch into retirement.

From my perspective helping many clients over the years transition to retirement, it is not the total of your net-worth that is the most important element that determines future success, rather, it is open, clear and respectful communication around your money and your life plans that determines success.

Money is and will probably always be one of the most confusing and challenging aspects of our lives. When is enough, enough when it comes to retirement? That was always the questions we holistic financial planners would often help clients find an answer to.

Now, it is not only determining when enough is enough, but how do we as planners, help couples align their core values with their money while leaving enough room for each person to honor their own unique vision of retirement while at the same time embracing the teamwork that brought them both to this remarkable achievement of financial independence, a.k.a. retirement.

Let the journey begin…

Image credit B. Schumin