I’ve worked in the wealth planning industry for over 30 years and over that time I’ve come to understand that there are some important precursor traits that financially successful people utilize to enhance the probability of financial success. Be sure to watch this three part video series to find out what these traits are!
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Retirement is one of the most significant life transitions that we experience. It should be a transition that leads to personal fulfillment and the pursuit of dreams and ambitions that may have been deferred due to professional and family commitments. Unfortunately, fulfillment and confidence are not always part of the retirement equation.
Transitioning into retirement impacts almost every area of life. For some people, this transition leads to a loss of purpose and meaning. Their work and what they accomplished through their professional activities provided a sense of meaning and contribution. They had not contemplated the possibility that a loss of meaning would be a part of retirement and no plans were made to cultivate meaning and purpose in areas other than work.
For others, work defines who they are. It’s their identity. When they leave the workplace, there is a loss of identity that can lead to depressive episodes. They realize that they were so involved in their career that they never took the time to expand their concept of who they are. To make it bigger than their professional/work identity.
When it comes to overall health, relationships play a key role. Many people have not cultivated relationships and social networks outside of their work world. As a result, when they transition to retirement, social isolation and alienation can take hold and have a negative impact on the overall health of the retiree.
Financial Concerns & Anxiety
These are just some of the social and emotional impacts of retirement. However, the issue that can create the most concern relates to financial preparedness. Poll after poll consistently confirms that the majority of people worry about whether or not they have planned effectively for their retirement. The Conference Board of Canada released a study on retirement preparedness in October 2014. After polling over 2000 people, they found that over 40% of respondents had no idea how much they needed to save for retirement. Other key highlights from the study were:
60 per cent of survey respondents have not saved enough for retirement.
Over one-third of Canadians say they don’t know when they’ll be able to retire.
Over 40 per cent of employers believe their employees are overly optimistic in their assessment of when they will be able to retire.
60 per cent of current retirees say their retirement incomes are sufficient to meet their retirement needs, but many project difficulties over time.
Although this is just one study, it’s completely consistent with findings from many other studies as well. It underscores that this is an important human capital and wellness issue that needs to be addressed. It’s obvious why your staff need to own this issue, but as a team leader or employer, why should you care?
Why You Should Care?
First, this concern around retirement bleeds away productivity. Low grade anxiety around financial issues erodes physical energy, leads to poorer focus at work and reduces overall productivity. Addressing financial concerns through education and financial coaching can lead to clarity, confidence and greater productivity for your staff. You win and your staff wins!
Second, as the work force continues to age, there is the possibility for litigation and at the very least, the erosion of good will, if the retirement aspirations of your staff are not realized because of poor planning and lack of clear understanding about their options. As a team leader or employer, it’s not your responsibility to do the planning for your staff. However, I do believe that employers need to take a leadership role in providing direction, education and guidance on how to plan effectively for retirement.
As it relates to your role in this process, here are some thoughts:
Increasingly, employers are doing a good job of educating their staff on the benefit options that people can take advantage of. However, it’s been my experience that there is a lack of effective coordination between the organizations retirement programs/benefits, and the personal planning that the staff member needs to initiate to effectively coordinate their personal planning with employer sponsored benefits. It’s one thing to know how the pension plan works. It’s another thing to know how to integrate these benefits into your own planning to accomplish your personal retirement goals.
In an attempt to gain cost efficiencies, employers are reducing their commitment and staffing for local, on the ground HR support. This includes counselling around retirement planning. I have had clients who have worked for large National firms for over 30 years. The benefit and pension plans are often generous. Unfortunately, once they retire, the employee ends up having to call 1-800 numbers to get assistance. Often, the assistance is at the level of the forms that need to be completed, but there is no real advice. Increasingly, the service contact person will attempt to maintain the retirement assets using the financial institution that has been managing the retirement plans on behalf of the organization/employer. Although there may be some minor cost savings for the employee, these savings don’t outweigh the negatives for the retiree; the lack of personalized planning advice and little or no implementation coaching. This lack of advice could have negative financial impacts on the employee that could far outweigh a reduction in management fees when dealing with 1-800 service providers.
Concerns around privacy and liability get in the way of planning and direction. More often than not, when a staff person retires, they will have to deal with documents that will say something like, “Before making your final decision on choosing your retirement option, be sure to obtain outside financial advice from a financial professional.” This is good advice, but it’s also an attempt to provide an added layer of liability protection. What if the person has no relationship with a financial professional? The majority of Canadians do not have a relationship with a trusted financial adviser. There are many reasons for this. I won’t spend time on this topic today. That’s for another post. Because of this, I believe that organizations need to be more engaged in the process of advice giving.
I completely understand why organizations want to create a separation between the explanation of benefits and the actual advice giving, which can create potential liability for both the HR Professional and the organization disseminating the advice. I do believe that employers should actively pursue the development of relationships with outside vendors/professionals who can provide workshops, education, coaching and advice on a fee for service basis. These outside professionals can help to bridge the gap between the benefits program, and the employees unique goals and circumstances. As well, the financial professional can provide direction on how to put the plan into action.
Confidentiality – I feel that it’s very difficult for organizations to bring financial coaching “in house”. For staff, there will always be concerns around confidentiality. For financial coaching to work, especially in the area of retirement planning, the employee needs to feel comfortable/safe around making financial and personal disclosures. This is more likely to happen when the organization retains the services of an outside firm that specializes in the area of retirement income planning and benefit coordination.
What if your organization provides no direct pension or retirement benefits? Even if you have no direct program in this area, it doesn’t mean you shouldn’t invest in education and financial coaching for your staff. In fact, I believe that it’s even more important for organizations that may not have the scale or funding to provide these benefits. Financial coaching and education sends a powerful message to your staff that you care. That message will pay dividends in employee loyalty and engagement.
I hope this post has provoked some reflection. My team and I recently hosted a seminar that we called Retirement Countdown. The content for this seminar was drawn from my over 30 years of helping families make the retirement transition. The presentation focused on some key strategies to think about when planning for retirement. The following link will take you to the video of the presentation as well as some helpful PDF/video resources.
Shaun Humphries is passionate about helping organizations and individuals navigate change and transitions through the cultivation of Professional Resilience.
Shaun is the author of The Resilient Professional. This eBook is packed full of strategies that will enhance professional and personal resilience, improve professional productivity and boost life satisfaction.
Click here for more information on The Resilient Professional EBOOK
Retirement is one of life’s big transitions. For many people, their employer pension plan is the largest income basket in their overall plan. Because of this, it’s critical that you are absolutely clear on how your pension plan works. In this video, Shaun Humphries, Senior Financial Planning Advisor with Assante Capital Management, reviews the critical questions that you need to have clarity on.