As some of my retired clients are fond of telling me, growing old is not for the faint of heart. As we age, it becomes increasingly important to have a support system of people to advocate for us. Unfortunately, I know far too many people who just have no one looking out for them—emotionally, physically, and financially—as they go through retirement.
The financial planning field focuses a great deal on preparing financially for retirement. Financial therapists and coaches also do a lot to help people prepare emotionally for retirement. All of that is crucially important.
It’s also important to pay some attention to what you need financially and emotionally after you retire. This is why it’s a mistake to assume that financial planning stops when you retire.
Financial planning is not a one-time event. It is a process of ongoing adjustments, updates, and managing through life changes and events. Your need for financial planning does not end when you retire. If you have the benefit of ongoing advice to help adjust your spending and lifestyle as needed in retirement, you greatly reduce your risk of running out of money.
A financial planner can help you avoid common retirement mistakes like overspending in early retirement, not managing IRA withdrawals to minimize taxes, and underspending out of fear that your retirement nest egg will run out. A financial therapist can help you work through the emotional aspects of retirement like making the adjustment from saving to spending and dealing with downsizing, long-term care, and other issues of aging.
Perhaps the most essential reason for having a financial and emotional support system in place during retirement is to prepare for the likelihood of a decline in cognitive and/or physical functioning as you age. It’s easy to think, “When things start getting harder to do, then I’ll get some help with my finances.”
The reality is that cognitive decline is often so gradual that by the time most of us recognize it in ourselves, damage has been done. Having someone else who can see what’s happening and gradually step in as needed can be extremely valuable, both emotionally and financially.
One of the biggest money scripts that I run into with people who are retiring is the idea that, “I’m not going to be earning an income anymore. I can’t afford financial planning.”
How much truth is in that money script? It depends. If you have, say, two hundred thousand dollars in retirement savings, your only other real asset is your home, and your primary source of income is Social Security, you may not be able to afford a fee-only financial planner.
What if you have a bit more than that in retirement assets, you already have a fee-only financial planner, and you aren’t sure you can afford to pay their fee after you retire? Remember, a fee-only planner is your advocate because they owe you a fiduciary duty. So ask them whether you can still afford to pay them. If you can’t, chances are they will tell you it’s time to fire them before you even bring it up. I’ve done this with a number of clients, and I know other planners who have done the same thing. It’s part of the responsibility of being a fiduciary and putting the clients’ interests first.
Some planners may also suggest affordable ways to get ongoing advice and support, perhaps through alternatives like hourly fees for specific services. So don’t simply assume you can no longer afford financial planning or succumb to fear that you won’t have enough. Ask questions and explore the possibilities.
It’s a myth that finances get easier in retirement. In many ways, they become more complicated. Like planning for retirement, planning in retirement is a dynamic process that never ends. Retirement is one of the biggest life transitions we make. It will impact every aspect of your wellbeing—emotional, physical, and financial. There’s all a lot of value in knowing that you have a trusted financial support system of people who know you, whose goal is your best interest, and who will advocate for you and have your back.
Check out The Financial Therapy Podcast by Rick Kahler concerning this topic.
