How to Make Entry Into Retirement Easier
Episode 6426th January 2022 • Human-centric Investing Podcast • Hartford Funds
00:00:00 00:18:36

Share Episode


According to the MIT AgeLab, retirement is made up of four phases. The Honeymoon Phase is the first one. Advertising portrays this phase as being filled with beaches, bike riding, and golf. Initially, retirees may think, “This is the life.” But after a while, these activities can become routine and not provide the happiness they expected. Find out how to help clients make their transition into retirement.


John Diehl: [:

the initial transition into retirement, and I know that's something

that many, many people struggle with because think about it for 30 or

40 years, we've had a routine. We've built a lifestyle around really

what we've done over time. But it's something that seems like as

people plan for it and we look forward to it with such really

enjoyment, thinking about what it will be like. What I find is that

as people approach retirement, sometimes it's not as glamorous as

maybe they thought, or at least there's a lot of apprehension

associated with it. If you had similar experience with anybody, you

know, or maybe with client clients or advisors that you've met.


Julie Genjac: [00:08:08] You know, my parents retired hand in hand at

the age of 55 and did exactly what you just described, John, they

planned and we had the party and it was just phenomenal. And the

first morning they woke up, my mom opened her calendar and she had

breakfasts, lunches, happy hours, dinners, get togethers with all of

her former colleagues, mostly girlfriends, for months. And my dad

went out to the pressure washer and just started pressure washing

every surface he could find. When the paint looked like it was about

to start peeling off the side of the house, I said, Hey buddy, why

don't you come over to my house? I still work. I could use your

services. But in all seriousness, I think they realized very quickly

how many hours there were to fill in a day. And pressure washing is

great for a day or two every spring, but that's not going to fill

months, years on end. [:

John Diehl: [00:09:02] I had a woman come up to me once after one of

my workshops, and she said, John, let me tell you the definition of

retirement. She said it's half the income and twice the husband. It

sounds like your parents might have experienced something similar.


Julie Genjac: [00:09:16] Exactly, that's right, but I haven't heard

that. [:

John Diehl: [00:09:20] Well, today, Julie, maybe to help us through

that transition, we're going to welcome Dr. Joe Coughlin. Dr. Koplan

is the founder and current director of the MIT Lab, and his research

examines how disruptive demographics of an aging society combined

with social trends and the impact of technology is going to shape

future innovations in business and government. Dr. Coughlin teaches

in MIT Department of Urban Studies and Planning, as well as the Sloan

School of Management Advanced Management Program. He advises a wide

variety of global firms in things such as financial services, health

care, leisure travel, luxury goods, real estate, retail technology

and transportation. He's also a senior contributor to Forbes

magazine, and he writes regularly for MarketWatch and for The Wall

Street Journal. Dr. Joe, thanks for joining us today.


Joe Coughlin: [00:10:14] Hey, John, great to be here. Julie, great to

see you, too. It's wonderful to chat with you about I do like that

line, though about half the income and twice the husband. You know, I

wrote an article not too long ago in Forbes that covered, believe it

or not, was a fire drill for retirement. And I think we found that

during the many, many months, indeed over a year that you can only

remodel so many rooms so many times. So imagine what's going to

happen in retirement when we got even more time, if you will.


Julie Genjac: [00:10:46] Well, Joe, outside of having a lot of really

freshly remodeled rooms, you know, I'm curious in your experience in

working with financial advisers and their clients, you know, after

the walks on the beach, the sailboat images, the golfing, the

bicycling, all of those really fabulous leisure activities that I

think we've all been trained to think of as retirement after those

maybe are as fresh. Talk to us about this first entry phase into

retirement. What does that look like? What does your research show

that most clients as clients? Could I do that? What is your research

show that most clients experience during this first phase is they're

transitioning and, I should say, into their retirement phase of their

life. [:

Joe Coughlin: [00:11:36] Well, great question, Julie, and as you

know, we've done some work with you and John and your team on many

times we've defined that little round being the honeymoon period. I

really frame it as being great ambiguity because after maybe it's as

long as the year, maybe it's even two years of, well, it's great

sunsets, beaches. We've got a favorite place to eat and whatnot.

Suddenly, you start getting into a routine, and if you think about

what retirement is supposed to be about and what vacations were about

when you were working with breaking routine. So you start thinking

about, well, we see the same people and the dog seems to be doing the

same thing at the same place. Every day they start worrying about

what are the new things they can do to keep them vibrant and engaged

or whatnot. But then ambiguities often that they want to keep

working. But yet they're retired or they're volunteering with verve.

And so it's unclear where they are at that point. It's all about the

celebration, but the celebration tends to end a little quickly, not

necessarily badly. But it seems to be the same stuff. Different day.


John Diehl: [00:12:44] So, Joe, as we think about this transition, I

mean, whether you a member of a couple or maybe you've never married,

maybe you're single, maybe you're divorced, whether if there's just

it's almost it seems like people when they get closer to the

precipice and stare over the edge, that question about what will I do

to fill all this time starts to enter our minds. Is that is that the

biggest conundrum? Because I think, you know, research has shown that

the biggest difference between retirees and and free retirees is that

when we retire, we think about all the activities we do during the

day. You know that no, the biggest change in terms of where we spend

our time is in watching TV, right? How many of us go? I can't wait

till I retire because I want to watch a whole lot more TV, you know?

But in reality, if if we don't think about this, if we don't plan

through it, it's going to cause issues, right? Or these what kind of

issues this the age lab see this transition to retirement causing for

people? [:

Joe Coughlin: [00:13:49] In fact, you're right, I mean, the number

one thing we do see and this is national statistics that each lab has

been digging into. Of people spending far, far more time watching TV.

They're also the only generation that appears to be buying books, so

they're doing a little bit of reading on the side as well. And of

course, music has become a big thing as well, but those are all very

idle and secondary. That's not only not great for the mind. It's

definitely not great for the body. So one of the things that we are

seeing when people look out over that period is, you know, when they

are approaching retirement, they're excited. They're just like kids

waiting, if you will, for Christmas. The want of the gift, the

excitement of Boy, if I get this gift, I'm going to be so happy. And

after they open the box, they play with it for a day, maybe even two.

And if they don't break it after about day three, it's like, Oh, you

know, this is a cool toy, but it's not as great as it used to be. So

for many, they either stay the course and watch more TV and stream

things that even their kids won't watch. Others start venturing out

and trying to find are their new things to do. Volunteering part time

work. The gig economy turned into, shall we say, the Land Office

business, if you will, for older adults, if you will, wanting to keep

doing something not just for the cash, but for spending the time.


Julie Genjac: [00:15:13] Dr. Joe, we've often heard you refer to this

first phase of retirement or this first phase of transitioning in

one's life into retirement is the honeymoon phase. And I think, you

know, when I think about it and I work with advisors and speak with

their clients that this is often the most envisioned phase. And I

think which I think is great. But why do you think it's so important

for advisors to really be talking to their clients about the

honeymoon phase in particular, especially before they transition into

that retirement period? [:

Joe Coughlin: [00:15:51] This is a very important phase because

they're laying down the groundwork for how they're going to live the

many other years in retirement. And so I would argue that it's less

about planning than it is about preparing so that transition should

be. Not that you're planning to volunteer. Have you identified where

you're going to volunteer? Have you thought about the days in which

you're going to do what we're going to do part time work? Have you

already made those contacts for those who say they want to downsize

or move? OK, well, it's fine. Maybe you haven't bought the property

yet, but have you looked at the location? Do you have places where

you will play, places where you will meet new friends places,

frankly, that you can depend on the health care you need? That's

simply that they have an emergency room. So for financial advisers,

this is important in making sure that their clients are separate

quality of life. But here's the other thing. This is the period

they're going to be spending a lot of money. One of the typical

rewards, if you will, in retirement, still is buying a new car or

downsizing a new place doing all that travel. So it's front end heavy

financially, but it's also front end heavily on the decisions and

preparation they need to make for the rest of their retirement.


John Diehl: [00:17:11] Joe is as a financial professional, I think

many times clients think about those mountaintop experiences, if you

will, right that that trip that we're going to take our whole family

on, you know, halfway across the world or, you know, buying that new

home somewhere where we've always wanted to live. But how how can an

advisor kind of get the client in the framework of, you know, in

between those mountaintop experiences, life happens in between? How

would you suggest a financial professional help that client envision

what life really looked like once the daily routine of going to work

on a regular basis Monday? Same kind of thing we've been doing for

years goes away. [:

Joe Coughlin: [00:17:58] You know, in social psychology, we know that

people tend to remember and assign more positive memory and energy

towards those peak moments that you talk about. So when we think

about our childhood, we tend to think of the more positive ones. and

wasn't as great at graduation and all those great little events. We

forget about the things in between that we're, you know, Johnny

wasn't doing his homework. His grades weren't that great. He didn't

play that well on the field to begin with. We remember the peaks. I

would say that for an advisor. One of the things we need to have to

do is to take the time, and it is time to say OK, vacations,

grandchildren, volunteering legacy. All great. Can you take me

through a day you're not traveling? Tell me when you're going to wake

up what you're going to do, it just kind of plan the day out. And by

the way, nobody wants to criticize their client. I don't want anyone

to do that. That's bad business and not and not very polite. But

getting them to think about give me a mundane week and tell me what

you're going to be doing on a day or a week. You can't go to the

grocery store all day and you can't walk the dog all day, so it'll

start to get that client to realize that in between the peaks, as you

put it very nicely, John, there's a lot of life to be filled.


Julie Genjac: [00:19:31] Dr. Joe, you now have me questioning every

great story in my memory bank thinking, maybe I'll remember the good

part. So now I'm a little little concerned, but we'll have to

reconcile that later. You know, I'm curious. I love how you describe

taking me through a mundane, normal day. I almost look at it as a dry

run for retirement or, you know, the transition into retirement. What

will your new life look like? And I always say to clients that, you

know, think about it all of a sudden tomorrow. The alarm clock

doesn't go off when that doesn't go off. How does your day unfold?

And I think that framework is so helpful. And and if I were a

financial professional sitting here, I think that's something that I

can have a great conversation with a client or a prospect immediately

to really help them begin to walk through that and said, do that. In

essence, dry run if you think about preparing for this. And I love

how you made the very subtle distinction between planning and

preparing of, although similar, I think they are very different. You

know, how can we arm advisers to continue to help clients make that

ation more tangible to them? [:

Joe Coughlin: [00:20:47] I think that, you know, for instance, if

they were to go through that normal day activity, if you will, that

you would want to have, can they give you specifics? So the

difference between planning and preparing is actually subtle, but

very real. I can plan to make dinner tonight. I can even make a

grocery list. But frankly, until I've got the food in the cart or in

my kitchen, I'm not prepared. I've since we planned, so I would have

advisers start asking people, Well, you say you want to volunteer?

What organization have you ever thought about that having made the

contact, you say you want to downsize the tone? Have you done like an

audit? Have you? Have you taken a trial run of retirement and spent

maybe a week or two? Or should you plan to spend a week, two or even

a month down in that town just to kind of get a feel for what's

there, who's there, what services you will need? So really pushing

the client a little harder? No. Every other stage of life we've moved

in lockstep with advice that was given to us. We knew what to expect

because frankly, there were lots of people around us that had done

the same thing. Retirement is actually very new, and it's much

longer, much more uncertain than any time we've ever had in history.

So people need to try it out, prepare. And the role of the advisor is

to help me anticipate things I don't want to think about and to

navigate that time that I have. And, of course, the financial

security to do both. [:

John Diehl: [00:22:17] So Joe, have a question for you, I mean, we

talk a lot about a financial professional leveraging stories in

helping clients understand some of these more difficult concepts. I

know. I just want your thoughts on this. Some advisors I've met have

actually tried to find clients in their book that retired maybe five

years ago and pair them up just for a cup of coffee or a Zoom call,

or, you know, whatever fits best. Just the kind of advice that client

who's thinking about retirement, you know, things that they might

have done differently are things that they didn't anticipate. What's

what's maybe one or two things you could recommend for financial

professionals to begin to get their clients to think about in

reality, not just the mountaintop experiences, but in reality, what

retirement might feel like? [:

Joe Coughlin: [00:23:11] I think that the often overlooked from

financial advisers standpoint is the fact that their book of business

is a book of stories. It is several stories now, hundreds of stories

in many cases and relating those stories, either in meetings with

their clients. I love the idea of having them, shall we say, meet

other clients. You know, so suddenly those those seminars and those

dinners could be both learning events and social events, not just

simply talking about financial topics and events overall, but I

think, more importantly, is really having the questions to ask, What

are you going to do? Who are you going to do it with? Where are you

going to do it? No real estate, we'd like to say, is about location,

location, location. Well, also, frankly, retirement is about

location, location, location as well. Where we live forms, shall we

say, the infrastructure of how we live later on, particularly in

than any other time in life. [:

John Diehl: [00:24:12] Joe, can I ask you a quick question, which is

in addition to what people were doing, would you also ask why they

want to do that? Because oftentimes I think people fill the agenda

ats, but we we miss the why? [:

Joe Coughlin: [00:24:27] And it's interesting that purpose, that

sense of purpose, the reason to get up in the morning is often lost

in retirement because in your youth, it was to go to school. It was

to work. He was to pay the mortgage. It was to raise the children to

help the family in retirement. You got all that time, all that

freedom. And many of those other demands have either been put to rest

or have moved out. The why is very important for one third of your

adult life? You can't just go, well, I'm free, you know, to do

whatever I want.

Julie Genjac: [:

given us so much to think about, and I'm hoping that the advisors and

financial professionals with us today are thinking about the

conversations, the stories that they're going to curate to help their

clients visualize and and also make the distinction between planning

and preparation. I loved your analogy that we can plan to make

dinner, but unless we're prepared with the ingredients, there

probably will not be on the stove in time. And for all of you that

are looking to deepen your relationships, change the conversations

with your clients and really help them prepare for the what the why

and the how of the honeymoon phase of their retirement. Click on the

link in the show notes or visit Hartford Funds dot com slash days.

Thank you again, Dr. Joe, for being here with us today and sharing

your insight and wisdom. [:

Joe Coughlin: [00:26:03] Great to be here. Julie, John, great

everybody. [: