Retirement is often talked about as an end—it’s the end of one’s career, it’s the last stage of one’s life, it’s the end game. Clients might be focused on how to prepare for retirement, which is critically important, but if they’re looking at retirement as the final goal, then they might not be preparing in the best way.
I recently sat down with Dr. Joseph F. Coughlin, PhD, Director of the MIT AgeLab, to discuss the dichotomy of retirement—it is seen as an end, but it can actually make up more than a decade or two of one’s life—and he gave me his perspective on how to help clients navigate what he refers to as the 8,000 days of retirement. I asked Dr. Coughlin to share his 8,000 days analogy for the purposes of this blog, and the following is his contributed content:
With today’s rising lifespan expectancy, we could be facing roughly 20 or more years in retirement—which equates to approximately 8,000 days. That’s a massive amount of time. Think about other 8,000-day periods in life, and we’re talking about birth to college graduation, or college graduation to middle age. If you think about it this way, it becomes clearer that retirement is not an end, but rather a new, complex, and unknown phase of life, during which so much could happen.
As an advisor, you need to think about how to have a more lasting, meaningful impact on clients’ lives, by helping them be more informed and prepared for all of the moving parts of retirement. It’s a daunting task for all involved, so let’s break down the 8,000 days of retirement into four phases:
The beginning part of retirement can be a bit of a gray area, because the transition into retirement might be slow, rather than a clean break. Clients might first cut down to working part-time or working on a consulting basis, before they take the plunge into full-scale retirement. This time is also exciting—you’ve made it to retirement, and now you can go ride bikes in the sunset and travel across the world and hold hands on a beach (or any other clichéd snapshot of retirement we’re used to seeing)!
Managing Big Decisions
Once the honeymoon stage of early retirement is over, and your clients have really adjusted to being fully retired, they start to have to face some big questions. Will they age in their current home, or will they move? If they move, will they move closer to family, to a warmer climate, or to a smaller house? Is it time to look into senior care facilities instead?
In this phase, clients are beginning to experience greater longevity risks—meaning that their health, mobility, and cognitive abilities are declining. At the same time, their social networks and financial means are also likely diminishing. Simply put, their needs are greater, but their resources are smaller.
At some point, your older retired clients will be tackling the intricacies of retirement on their own. This is when advisors need to start thinking about who in their clients’ lives they need to establish a relationship with—who can your clients bring to future meetings to help, who will be your clients’ beneficiaries, etc.
What Dr. Coughlin is showing by using these different phases is that retirement is big and complex and overwhelming—but it is not the end, and it is not what stereotypes would have us think. In everyone’s retirement, they will face these phases, but there is no formula for when or how the timeline will unfold. Advisors need to go beyond just the finances and take their clients through Dr. Coughlin’s 8,000-day scenario, so that they can help their clients live a better and longer life, by helping them understand their needs and what factors they need to consider. Knowing these phases will put advisors one step (or more) ahead, helping them ask the right questions, offer the right information, and deliver advice in more digestible chunks.
I’d like to extend a special thanks to Dr. Coughlin for sharing his 8,000 days concept with us.
The MIT AgeLab is not an affiliate or subsidiary of Hartford Funds.