The Number That Will Transform Retirement for Your Clients
Episode 6229th December 2021 • Human-centric Investing Podcast • Hartford Funds
00:00:00 00:19:36

Share Episode


As lifespans continue to rise, retirement could be as long as 20 years—approximately 8,000 days. Therefore, investors should be preparing for four retirements instead of one.


John Diehl: [:

about longevity, and I don't know. Did you read the article this week

about one of our favorite Americans, Julia Hurricane Hawkins?


Julie Genjac: [00:01:10] I did, indeed. She is unbelievable.


John Diehl: [00:01:14] So for those who may not have heard about

Julia Hurricane Hawkins, we often talk about her in relation to

longevity because up until this time, at one hundred and three years

old, she was the world record holder in the 50 meter dash. But this

week she became the first person over age 100 at one hundred and five

years old to run a 100 meter race. I think she finished in just over

or just under a minute and in three seconds. It's pretty staggering

when you think about it. [:

Julie Genjac: [00:01:46] It is I don't even think I could do that

today, and I'm a few years younger than one hundred and five.


John Diehl: [00:01:52] For sure. So, you know, Julie, when we think

about people living longer, it's not only living longer, it's about

living better, and that's why we're really excited to have back on

the podcast today. A guest that's probably familiar to many in the

financial services community, Dr. Joe Coughlin is the director of the

MIT Age Lab. His research examines how the disruptive demographics of

an aging society, social trends and technology will shape future

innovations in business and government. Dr. Kauffman teaches at MIT's

Department of Urban Studies and Planning, as well as the Sloan School

of Management Advanced Management Program. Joe advises a wide variety

of global firms in financial services, health care, leisure and

travel, luxury goods, real estate, retail technology and

transportation. And that's just in his spare time. He's also a senior

contributor to Forbes magazine, and he writes regularly for

MarketWatch and The Wall Street Journal. Joe, welcome to our podcast

today. [:

Joe Coughlin: [00:02:55] Hey, John. Julie, great to be here. I got to

somehow shorten that bio there's a fine line between a bio and a

eulogy. [:

John Diehl: [00:03:05] that's for sure. So, Joe, when we think about

retirement and I mean, that's both as individuals, but also

specifically as financial advisors. What do you think is the problem

in the way that most people think about retirement today?


Joe Coughlin: [00:03:25] You know, generally speaking, retirement has

been framed by as I'd like to be calling it, Bruce sure, thinking

we've created a whole story of retirement as I write in my book The

Longevity Economy, about it being a short period of life. Some travel

with the grandkids, maybe a cruise ship or a bout of norovirus and

lots and lots of golf, apparently. The new innovative way people have

been talking about it is not much better. We're all going to be

riding bicycles on river walks in small towns, riding by people to

all drinking white wine. So maybe some of this isn't so much

incorrect, or maybe not even that terrible, but retirements a lot

more complicated than that and a lot longer than people think.


Julie Genjac: [00:04:17] So, Dr. Joe, this this topic is near and

dear to my heart. I have a great grandmother and a great aunt that

lived to one hundred and four and a hundred and five, respectively.

So there is a lot of bike riding, apparently in my future, except I

don't really ride a bike very well. So I'm curious, you know, as as

financial professionals in their clients plan for retirement, what

does this longevity create? [:

Joe Coughlin: [00:04:41] You know, if you think about it because it

is a much longer life. And by the way, at the end of life, there's

far less structure. The very thing that we look for in retirement is

now the time is mine. That's the good news. It's also the challenge.

You know that eight to five or that nine to five that we used to

cruise, that was work and added structure. The kids that annoyed you

for not doing their homework at night, that you had to take time to

help them with it added structure. So probably one of the big things,

especially you with great genes, centenarian genes, if you will. We

now have to figure out how are we going to structure our days so that

we're engaged? We have purpose, frankly, very simply said we have a

on to get up in the morning. [:

Julie Genjac: [00:05:31] I spoke in the last couple of months to one

of my work colleagues who retired probably about two years ago just

before, you know, COVID said in. And when I was talking to him, I

asked him what the biggest difference was. There was anything

different, I should say, than what he expected. And this is a guy

who, you know, he had the RV set up. They run a travel all over the

country and they did some of that. But he said to me, John, the

biggest difference. And he said, and we talked about it all the time.

We spoke to advisers and clients. But the biggest difference is how

much time I have on my hands. It's exactly what you said that

at will fill all those days? [:

Joe Coughlin: [00:06:16] And just just think, you know, on a on a

calendar basis, there's 52 weeks, 365 days and change to the year,

let's say you do travel and let's say you really love to travel and

you want to see lots of things. Two months of travel, even if you can

afford it, even if you have that much stamina, what are you going to

do the other 10 months? And maybe you think grandchildren will fill

that? But his grandchildren get older, they get busy. They've got

their own soccer practice. I've got an sat prep. They've got things

to do, if you will. So all those things are quite often financial

advisers here, as my goal in retirement are the things we're going to

do in retirement. They're short order. Their brochure level thinking

about what we do every day. [:

Julie Genjac: [00:07:06] That makes so much sense, Joe, and I know

today we're talking about:

front of me. Will you share with us what that means and how that

framework can be helpful as we think about our longevity and planning

for the ultimate retirement? [:

Joe Coughlin: [00:07:21] Well, you know, numbers are very indicative,

they can't tell us everything, but they do frame this story of

retirement, I think fairly well. So let's be generous with the math.

It's, shall we say, close enough for government work from zero to

about twenty one years old. And for those that may be listening if it

makes it easier for you, legal drinking age but from birth to 21

years old, what:

midlife crisis, many would say that's 46 47. Whatever that might be

is about:

actuaries and maybe even a few engineers are now starting to see an

algorithm. And from that midlife crisis to that law of Newtonian

physics of retirement 65 years old, it's about eight thousand days.

But here's what most people don't think about. More than half of us

will live past eighty five and change. In fact, for financial

advisors, the greatest correlation to living longer is education and

money. So anyone who's using average books and Social Security

actuarial tables, you're not actually being very accurate. But here's

the thing from retirement age of roughly 65. Eighty five and change

an entirely new:

one, let's call that youth. And frankly, I've got two daughters. I

love them dearly, but frankly, no return on investment at that period

at all. So let's just kind of push that off to the side. One of the

things people need to start thinking about is that period that we

currently call retirement is not just a long bike ride in a few short

cruises. It is fully one third of adult life. Think of all the things

that happen in those other thirds the changes, the structure, the

experiences, the needs, the demands. Why do we think that retirement

is going to be any less complicated or any more easy?


John Diehl: [00:09:31] Well, Joe, and I've heard you say, and I think

this is right, if you think about those first three segments, we kind

of have mentors and teachers to kind of guy this along the way. But

when it comes to retirement, who do you recommend we look towards?


Joe Coughlin: [00:09:46] Well, you know, it's very interesting,

you're right, John, because as much as we all like to think we're

very individual and you know, we we've we've done this on our own, we

came up with our stories. You know, in a young age, we've got our

teachers, we've got our parents, we have our peers, we get to young

shall we say that that second:

you know, heck, you've got everything from from your bosses, college

counselors. And as I like to joke, no member or a number of years

ago, a series of books that came out what you expect when you're

expecting. Well, do you know there's actually now a book that has

been added to that? That's what you expect before you're expecting. I

thought humans had that one pretty down, but apparently now we have a

guidebook for that. The bottom line is that we have guidance all the

way through and frankly, the millennials and the younger Gen Xers.

These are the How-To generation. They want to do the do it yourself,

but they need a book for that. So as we think about that last eight

thousand day period, that period we call retirement, there really are

no mentors or metaphors to follow the generation that's retiring

today. I call them generation uncertain. They generation you. They

are actually looking for advice, they're looking for models. And

quite often we look to what our parents did and then we add a little

bit of time. We might look to others that are peers. We look to

advertisements and the like. Those are all short supply. This is the

greatest opportunity for financial advisors to help people anticipate

ate one third of adult life. [:

Julie Genjac: [00:11:22] Dr. Joe, I recently heard someone say that

they knew that they would be ready to retire when their mindset had

changed from I'm retiring from something to I'm retiring to

something, and I just I loved the way that that the simplicity of

that. I'm curious, how have you seen advisors and their clients

respond and work with this eight thousand days concept and framework

or, in my case,:

discussion. [00:11:48][26.3]

Joe Coughlin: [:

kind of what you were talking about retiring from something to

something. I think one of the words we should start to adopt more

often is transitions that, you know, I may be leaving one career or

transitioning one career or even transitioning from one job. The ones

who seem to have done the best are they start preparing before they

make that jump, that they start thinking about what they want to do

and they start laying the groundwork. So even if they don't want to

continue working for pay and retirement, they start getting involved

in volunteer activities as they start to transition off of where

they're going to be retiring from. So that there is a smooth move

into the next thing. We work for a variety of reasons and work is not

just about money, it's for meaning, it's for social connection. You

spend more time with your call, you know, your colleagues at work or

on Zoom or whatever it might be. Then you do your own family if you

do the math. And so those who do well start to think about that well

ahead. [:

John Diehl: [00:12:53] So, Joe, what's the typical reaction when you

provide this kind of framework to either clients, but probably even

more importantly, financial advisers, how do you how do you see them

respond to this concept of:

Joe Coughlin: [00:15:07] So quite often when clients hear about the

8000 days, it's hard to design the math, they realize after it's

discussed with them that it is one third of their adult life and so

their eyes get wide because they realize it is a lot of time. And so

as a result, we start thinking about, Wow, what do I need to do? And

financial advisers, they find it to be a great tool because it really

does push their clients to go further and deeper than simply, what

are your goals in retirement? And quite often, those are very

superficial at best. But then all of a sudden, financial advisers

realize something else. Now that you've asked the question, you

better have a full quiver of other questions or possible answers to

help that client think through. And this is the new business of

longevity planning, not just simply financial planning alone.


Julie Genjac: [00:16:05] Dr. Joe, I love this framework, and you

mentioned the word structure earlier, and I think, you know, for so

many individuals, retirement feels so unstructured, and I'm curious

for financial advisors that are interested in really changing the way

that they interact with their clients around the theme and topic of

retirement and maybe even interested in changing their word to

transition as opposed to retire. How have you seen advisors implement

this in their conversations, in their practices, in the in the

interactions that they're having with their clients? Because I think

so much feedback that I receive from financial professionals is they

love concepts, but then it's what do I do with it? And so I would

love to hear from you what you're seeing in the industry in terms of

the actual implementation and execution of this eight thousand days

framework. [:

Joe Coughlin: [00:16:59] It's interesting the mathematics of money is

pretty structured, we've got software for that. We've got a

structured portfolio's model portfolios for that. But for the better

advisers, they already know the answer for the newer advisors and

those that are developing the notion of longevity planning, they're

using the oldest tool that we have as humans. The story, they're

actually trying to engage more with the client to tell them stories

about their own life if they are of similar age or the lives of other

clients to start to get their client, to start thinking about more

broadly what they're going to be doing. The business value of this is

you demonstrate as an advisor that you want to know that you care,

that you are being empathetic with how this person is thinking and

where they are going. And by the way, your true value that goes to

transitioning prospects into clients and retaining clients overall is

that you are helping them think about things they had never thought

about or anticipated. And you have saved them from the surprise that

they may have had that their house is no longer going to be able to

support them as they age, or that caregiving is going to always be

part of our lives as we age. How do we plan for that? But here's the

thing those are all inherently financial do. So financial advisors

have an incredible license to get into every nook and cranny of our

lives by opening up our eyes to what we're thinking and telling

t how long it's going to be. [:

John Diehl: [00:18:33] So, Joe, how do financial advisers then deal

with a client who has basically inherited that traditional view of

retirement? You know, the one that lasts five to seven years and we

try and fit as much leisure in as we can. So they're envisioning

beach and golf time and shopping and traveling and all that. But but

it's really not aligned with your eight thousand day model, is it?


Joe Coughlin: [00:18:56] No and as some of you know, in my book The

Longevity Economy, I interviewed about 60 retired CEOs. The highest

concentration of CEOs in the United States are in Napa, Florida. I'm

sorry in Naples, Florida. And very interesting is that what we found,

even with people had money, Maseratis and a membership at a golf

club. The bottom line is they weren't that happy after a longer

period of time. I did a bean count on the average number of golf

rounds at some of these guys were playing, and I wrote this up in a

Forbes article a number of years ago. Do you know that the average

person who thinks that golf is going to be their ultimate destination

l add a few beach walks to is:

golf, even at my best? That would be purgatory, but on most days that

would be hell for me. [:

Julie Genjac: [00:19:52] Joe, that makes so much sense, and I'm with

you, my golf swing is a little rusty as well, but I think for those

advisers that that are really looking to move beyond the money, the

Maserati and the membership framework, where would you suggest that

they go to dig a little bit deeper into this concept? Learn more soak

ou and your team's research. [:

Joe Coughlin: [00:20:15] Well, certainly, you know, we've worked with

Hartford Funds, where a number of years you have all done an amazing

job at translating our research into practical advice and practical

strategy. There are certainly the Age Lab website, but I think the

other thing is dig deep into yourself, look at your own clients.

Every one of them is a wealth of story and experience. Part of your

new value is not simply financial security, but it is the combined

wealth of other people's experiences that allow you not to argue with

a client, but to ask profound questions that get them thinking so

they can just plan for retirement, but be prepared for living longer

and better. [:

John Diehl: [00:20:59] And Joe, I know it at the MIT Age lab, you've

assembled something called the plan network. Just a quick word on

what that is, because maybe that's it a source of information for

advisors as well. [:

Joe Coughlin: [00:21:11] Absolutely, I would want everyone to join,

it's free, we only pulse you once in a while the survey, but give you

lots of information and invite you to webinars. It is the Preparing

for Longevity Advisory Network. If you go to the Age Live website,

Age LabCorp and MIT Dot Edu Backslash Plan. Sign up and join, and

you'll have lots of new content that you can use as you chart the

future of longevity. [:

Julie Genjac: [00:21:39] Excellent. Well, thank you so much, Dr. Joe,

for sharing your insight on the eight thousand days concept and

actionable ideas for financial advisors and their clients to really

think about retiring from something to something and ultimately

making that transition. And for all of you with us today to help your

clients visualize and prepare for their own eight thousand day or

more retirement. visit Hartford Funds dot com slash days. Thanks

again, Dr. Joe was a delight to speak with you today.


Joe Coughlin: [00:22:11] Thanks, Julie. John, great to be here.