The Psychology of Retirement Planning

Well, hello and welcome in to Mr. Stillman's Opus. I'm Ben George.

He's John Stillman over at Rosewood Wealth Management. And today, John, I know sometimes you do play the part of a therapist a little bit along with the financial planning you do, right? It's amazing how big a part of the job playing therapist actually is. And I don't know how much of that is on the psychological side. I know a lot of times you have to work with couples that maybe don't enjoy talking about money when one party does. But how much of it is psychological for you?

A lot. I mean, people have a weird relationship with money in a lot of cases. And I don't try to dive into necessarily figuring out the childhood trauma that causes you to feel a certain way about money.

But, I mean, some of those things do kind of come up. The way that money was talked about in your home growing up, or if there never was enough money. Money can just be a stressor for a lot of people. So, yeah, there's a lot of psychology that goes into it. Well, the reason I bring it up is because I pulled this article from a licensed professional counselor for psychology today. It's titled The Psychological Investment in Retirement.

So obviously we focus a lot on finance and money and investing. But are you prepared emotionally and psychologically for that transition? So she points out a number of things that people struggle with typically in this aspect and some things that you can do to help prepare yourself to make this transition much smoother. So I want to analyze it for you and we'll put this in the show notes. So if you want to read it for yourself, it's a good read. It's worth the time. So check it out.

It'll be in the show notes. But I want to get your thought on a few of the key points that I pulled from here and kind of get an idea of what you see and whether or not you agree with everything that's being said here. So the first one, we are creatures of habit, right? So we get very comfortable with our life, our routine. So when you make this transition, obviously you kind of leave that behind.

But few people, she points out, actually consider the consequences and the feeling you'll have when you actually do leave that life behind. Yeah, so there are a lot of things that happen during your normal work day that are important to your life that you don't necessarily think about. Like depending on what your job is, you might get a lot of exercise at work that you don't really consider. Like maybe you're doing a lot of walking around and you're up and down a few flights of steps every day and you're just up and moving and you're out doing things. Now certainly there are cases where you're very sedentary and sitting at a desk all day and you'll be more active once you retire. But for a lot of people, there is some activity built into their job that serves as exercise that they don't necessarily think about.

And so if you're not actively replacing that exercise, like that can have effects on you mentally and emotionally as well as physically. So that's one thing. You have the friends that you deal with. I mean in a lot of cases, you're around your co-workers as much or more as you're around your family. And so, you know, everybody kind of thinks, well, you know, I'll maintain relationships with these people after I'm gone.

No, you won't. I know like two people who have done that, who have actually, and when I say stayed friends, you can stay friends, but that doesn't mean you'll hang out. I only know a couple of people who have retired and still actually hang out with the people that they worked with. And so you have to think about replacing those friendships in your life. Even if you don't necessarily consider the people at work close friends, because you interact so much, you're having conversations about life.

I mean, for a lot of folks that those really are their friends. And so if you're not heavily involved in church or some kind of social group or, you know, really friendly with your neighbors, you can retire and find yourself suddenly kind of socially isolated just because you haven't developed relationships outside of the office very well. So that's another thing you need to think of before you retire is, okay, well, who am I going to hang out with?

Who am I going to interact with? You know, I think it makes sense why the second point here is that people are struggling to find consistent, genuine and lasting meaning. And I guess because you have kind of this free time, you don't have this routine, you're kind of maybe not lost necessarily, but you're searching for something. And this is something that retirees struggle with. And this is worse for men usually, right? Because so much of our identity is tied up in our job. I've seen women like that, too, but they're usually better about not being defined by what their job is. And so for a lot of guys, yes, they'll retire and they almost go overboard on like diving into a hobby, whether it's, you know, working in their shop or ham radio or whatever, because maybe they haven't had a very well balanced life before. And then you take the one thing that they focused on, their career, and you remove that from the equation. And for some people, it's just sort of, okay, what do I do now?

Who am I? And so you have some people that, like I said, will dive into this one thing and make that their identity. You have other people that are just sort of floating around, not really well defined by anything. And in some cases saying, you know what, I've been thinking about going back to work.

I kind of miss it. Well, it's not that they really miss work. It's that they miss an easy way of defining themselves. And if they can just define themselves by their job, well, okay, I'll go back to work and that'll solve the problem of my identity crisis, right? So certainly there are people who have very fulfilling lives outside of work and those things can flourish once they're retired. But if that's not you, don't just assume that retiring is so suddenly going to make your life happy and unicorns and rainbows just because you're not going to work. In a lot of cases, it can go the other way. Well, you know, as you're kind of out there searching for that too, right?

She points out that this is a good time then to maybe embrace the person you want to be, enjoy those things you've always wanted to do. And it sounds like some of the clients you've worked with have kind of dove headfirst into that in many cases. But this is a great time to try those things that you've been thinking about.

Yeah. And the obvious one for a lot of people is travel, right? Like they've got a long list of places that they want to go and, you know, maybe they do a trip or two a year right now. But like, as an example, I have a couple I work with who they do a big trip, usually two weeks every year, a different place, some far flung location in the world.

Once they retire, they'll do a lot of that. They'll do several trips a year like that. But, you know, they have limited vacation days now. They focus all of their vacation days around the major holidays and their two to three week trip that they do every year. Well, once they don't have to worry about taking vacation days, that's going to open them up to hitting all the other places on their list that they want to see.

And it's a long list. So travel is the most popular thing that people do. But sometimes it's family related, right? Like sometimes it's I just want to spend more time with my grandkids and people really dive into that. I've got several clients in that boat where, you know, they're trying to sort of coordinate their retirement with maybe son or daughter having kids so that they're available for child care. Maybe not every single day, nine to five, but I want to be available to keep the kids every Thursday. And then the in-laws are going to keep them every Tuesday. And, you know, my daughter's off every Friday. So now they're only paying for daycare two days a week. Like that's much more manageable for my son and daughter than paying for daycare five days a week, right? So there sometimes are these family considerations and that can be a purpose. That can be something that some people enjoy doing is putting that time into family.

Trenton Larkin So then what can we do about this to improve our situation and be prepared in these instances? And one thing that she points out is just, you know, you have to be willing much like your money in the way that you invest financially in your future. You have to do that emotionally, too. And I think we talk about this much more just as a culture, Jon, but, you know, you have to invest in your personal growth and development.

So how can we do that? Jon Moffitt So, again, if you don't have the built-in social groups, church or I don't know, what are the like civic organizations that people are members of right now? The Elks Lodge or whatever. I don't even know like what those things are that somebody might be involved in this day and age.

2022 in the year of our Lord. But for a lot of people, it's church and then, you know, like church adjacent type of organizations. And those can kind of be the place where you are investing in yourself emotionally, spiritually, whatever. Other people, it's going to be I want to go back to school. I want to take classes on whatever. I have a client who's going to be retiring soon. He's already mapped out.

I'm going to go down to Carolina. I'm going to take one class every semester. Not going to cost him that much to basically sit in and audit a class at age 68 or whenever this starts. He's already picked out three or four that he wants to do. Just things that he's always been interested in, has nothing to do with his career. Not anything he's going to do anything with probably the rest of his life. He just likes to learn.

And so he's going to go enjoy that. I personally can't in my wildest imagination comprehend the idea of wanting to go back to school in any form or fashion. But, you know, for some people that's the thing. So you have to decide what's important to you. And then if you need to put some dollars behind it to make it happen, let's figure out what that looks like.

I mean, obviously in his case, going back to school, like I said, not going to cost him a lot, but it is something we need to work into the financial plan. For other people, it might be my mental health has not been great. And I'm actually going to take this time to spend a little money on, you know, talking with somebody to work out some of my old trauma from 40 years ago.

Maybe that's something that you've never wanted to put money toward before. And now is the time to do it. You got a little more time on your hands.

So maybe today's the day. Well, a good analysis of this article, the psychological investment in retirement. Now I want to shift gears a little and just kind of talk about what you're seeing over at Rosewood and the clients that you work with and just kind of what you've observed from how they've handled it. So with your clients, what are they doing and what have you seen them do to mentally prepare for retirement, you know, even years out? Well, I would say the most memorable examples of people preparing for retirement well in advance are the people who really either just hate their job or they hate working in general. Just tired of going to work. So I can think of one example, husband and wife, they both just hated their jobs really from probably the ages of 58 or 59 on. And, you know, could they change careers at that point?

Yeah, but they're like, look, we're going to be done in four or five years. Let's just stick it out. Stay where we are. Let's not jump out of the frying pan and into the fire, end up in a job that we hate even more than this one.

At least this is a known commodity. Let's just stick it out. And boy, those last four or five years for both of them were just a slog, just a chore for both of them to finish up. And all they ever talked about was, oh, my gosh, I can't wait to retire.

I hate work so much. That was always our conversations. But, you know, they were a little behind where they needed to be from a mathematical standpoint to be able to retire even in their early 60s. So we set age 65 as their target. And I gave them some pretty clear goals of, all right, here's what you need to do if you want to walk away at 65. And man, with that motivation and the end date in mind, you wouldn't believe the thing like they started saving almost 60 percent more than they had been saving. They said, well, look, let's watch our spending. Let's make sure that we can not work a day past 65.

Let's hit all of our targets. They actually ended up, I think, both walking away at 64 and a half because they were so aggressive with, you know, accomplishing the goals that I laid out for them. So by the time they retired, they were so elated to be done with these jobs that they'd hated for half a decade or more that they didn't even have to have a specific plan for what they were going to do in retirement. Just not going to work is like heaven for them. And now they're, I don't know, three or four years into retirement and just absolutely loving it. I don't think they do a whole lot necessarily, like not necessarily a lot of hobbies there. They spend time with family a lot. They have some friends in their neighborhood that they're really close to and they're, you know, dinner at their house once a week and then, you know, friends at their house once a week.

So they have the social interaction there. But for them, it was just this, I'm so excited about being retired. It's all I'm going to think about for five years. So for them, they were mentally prepared just by virtue of how much they hated work. Wow, that's really cool to hear and interesting. I mean, it motivates you to want to take that step and write and get ready when you hear something like that. So final thing, I guess, I mean, it's clear that you have put thought into this process and kind of what this aspect of planning is. But how much do you actually intentionally include some of this psychological, the softer side of planning into what you're doing on the financial side with your clients? Well, like you said, a part time therapist is kind of a job, right? So I have been much more proactive about that, I would say, in the last four or five years of just kind of getting people thinking about, all right, what is life going to look like when I'm not going to work?

I mean, certainly when I first started out in this business, that's not a thing that ever crossed my mind. Because, you know, most of my clients were preparing for retirement. And then over the years, as I had clients, then retire, and I saw some of the challenges they faced mentally, emotionally, physically, all that.

That's what gave me more context, more understanding of what the transition into retirement looks like, other than just the financial side of it, which then has allowed me to sort of prepare people that are now today, where somebody else was 10 years ago. And, you know, I can learn from Jim's experience and pass that on to Frank and Diane. Was that, is that George Costanza's appearance? No, that was Frank and Estelle.

Never mind. Who's Frank? I feel like Frank and Diane is somebody. It's got to be. I don't know.

But, yeah, maybe somebody you've worked with before. But you get the idea. Yeah. Well, it's a good discussion. And this article really gets you thinking a little bit. So take the time to read it and see what you think. If you have any questions, you can reach out to John.

You can do so at RosewoodWealthManagement.com. But we'll put the article in the show notes. So give it a read and let us know what you think as well.

It's a good look at the other side of retirement planning, the one that maybe doesn't get as much attention, but it's just as important if you want to truly experience and enjoy your retirement to the fullest. So we appreciate it, John. May have to come in and get a spot on your couch sometime for a little therapy session. We'll see. Yep.

Come lay on down. We'll talk about your retirement, which is, can't be more than 20 years away, right? Hopefully less. We'll see. We'll see. But, yeah, it's the good stuff. And I appreciate your insight as always. And we'll do it again in a couple of weeks. Talk to you then.