The Retirement Risk Hiding in Plain Sight

For decades, retirement planning has centered on one defining question: Will I run out of money? It’s an important question and one that is vital to address. But, as lifespans are continuing to push new limits, there are another set of risks that must be addressed.

Many people can run out of purpose, connection, adaptability, independence or community long before they run out of assets. That is the retirement risk hiding in plain sight. A client can have a well-funded portfolio and still struggle in retirement if they lose the relationships, structure, identity and sense of contribution that gave their life meaning during their working years.

Through conversations on my Money Without Math podcast with gerontologists, longevity researchers, housing specialists, retirement experts and place-planning advocates, one message has repeatedly popped up: successful longevity takes not just capital but intentionality. And those both require advanced and continuous planning.

Retirement Has Changed

The old playbook looked something like: go to school, complete education, build a career – perhaps at one place of employment – and then retire. But more often than not, that’s not the case. Today’s retirees could have had several careers before retirement and may continue working in some capacity even if they are “retired.” Retirees are often also found in the position of caring for their parents or spouse or helping to raise grandchildren in some capacity. Some retirees also start a business or volunteer with a cause that was close to their heart but something they were unable to pursue while working.

For many, retirement is not an ending; it is a transition. And for some the social aspects of it can feel quite sudden.

Clients nearing retirement sometimes say they still have “gas in the tank.” So while the demands and everything that comes with a full-time career is no longer appealing to them, they would still like the opportunity to mentor, learn, create, contribute and/or serve somehow. They want flexibility, but not necessarily inactivity. They want freedom, but not isolation.

That creates a planning challenge that cannot be solved by a Monte Carlo analysis alone. It’s quite nuanced and a lot more complex.

As financial planning can determine whether a client may be able to afford their projected retirement, longevity planning requires work toward the answer of a broader question: What will make the next 20, 30 or 40 years worthwhile for you?

This throws out the window the idea of a rigid retirement agenda but instead creates opportunities for fluidity if the retiree decides to take them.

Social Health Is Financially Relevant

A retiree’s social connections are often treated as something that’s personal rather than also being a planning issue. This area could have tremendous implications for a person’s well-being and resilience, which can impact their longevity, as well as financial decisions around care, money and housing. If a client’s social connections are all moving to Florida, that might not have been an initial part of their retirement planning but perhaps now the feasibility of moving to another state is a topic of discussion.

After all, longevity experts have consistently identified social connection as one of the strongest predictors of healthy aging. Research highlighted by Ken Stern suggests that loneliness may have a health impact comparable to smoking 15 cigarettes a day.

The challenge can be that during any transition, including retirement, relationships are not always easily sustained. When a person is working, there’s routine social interactions from having colleagues and clients to professional events. When those interactions don’t regularly occur, personal connections can weaken or disappear. A client may have more time than ever before but fewer reasons to leave the house.

Just as advisors must work with clients so they intentionally save for retirement, they need to check in with their clients about how their personal relationships may or may not be impacted by their retirement.

A conversation about a client’s social health can open up more meaningful planning opportunities. This can show priorities and risks that otherwise wouldn’t have entered into the financial planning meeting.

Just the Notion of Aging in Place Is Not a Plan

Most people say they want to remain in their homes as they age, which is understandable as home brings with it familiarity, perhaps proximity to family or friends and memories. But the desire to age in place is not the same thing as having a plan to do that

As advisors, we need to help clients consider potential mobility, vision and other health changes and how that would impact their plan. Is the client’s house riddled with stairs and too much to clean? If they lose the ability to drive, how will they be able to have their daily needs met as well as social interactions? These kinds of housing decisions can profoundly affect both quality of life and financial outcomes.

Advisors can help clients think proactively to ensure that their desires have been thoroughly thought through and help them make the most optimal decision.

As one longevity researcher observed, “You don’t make decisions about later life in later life. You make them in midlife.” So advisors with clients in their 50s and early 60s should begin having these conversations if they have not already.

Adaptability Is a Longevity Skill

Let’s be honest – long lives inevitably include change. Dr. Kerry Burnight calls these moments “expected surprises.” They are not necessarily predictable in their timing or form, but they are part of a long life.

The people who thrive are often not those who avoid changes; they are those who develop the capacity to adapt. I would like to argue that adaptability is both emotional and financial. It means having a flexible financial plan, but also maintaining relationships, being open to changes and new routines, and creatively imagining several versions of their successful retirement.

Advisors can support this kind of resilience by making room for conversations that go beyond market performance and portfolio allocations as clients may need permission to acknowledge uncertainty, reconsider old assumptions or adjust their vision of retirement as circumstances evolve.

Sidebar: Five Longevity Questions Every Advisor Should Ask

What are you retiring to, not just retiring from?

Who will be part of your daily life 10 years from now?

Is your home prepared for aging, caregiving and changing mobility needs?

What gives you purpose today, and how will you continue that in the future?

If you live to 100, what would a successful life look like between now and then?

These questions often reveal more about a client’s future well-being than portfolio projections alone.

KAREN COYNE, CFP®

FINANCIAL ADVISOR

Clarity Planning

12920 CONAMAR DRIVE, SUITE 202

HAGERSTOWN, MD 21742 T 301.739.7002

www.raymondjames.com/clarity

Raymond James Financial Services Inc, Member FINRA/SIPC

Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC. Investment advisory services are offered through Raymond James Financial Services Advisors, Inc. Clarity Planning is not a registered broker/dealer and is independent of Raymond James Financial Services. Any opinions are those of KAREN COYNE, CFP® FINANCIAL ADVISOR, Clarity Planning and not necessarily those of Raymond James.