Five years ago, I made the biggest mistake of my career.
I gave some untimely advice to a new client and quickly realized the full impact our work can have on our clients’ lives — not just on their wallets.
When Jim (I'm withholding his last name for privacy reasons) first visited my office, he was 62 years old and simply gathering information to see if he could retire at 65. I saw he had built up a sizable nest egg in a 401(k) and was debt free. He was a diligent saver over his entire career and was in an excellent financial position, so I gave him the most surprising news of his life. I told him, “Jim, I have great news for you. If you want to, you can retire right now.”
He replied, “You mean I don’t have to wait until I’m 65? Will I have enough money?”
“That’s right," I told him. "We’ve calculated for risks and inflation, and with your planned spending, you will have plenty of income to retire today."
About a week later, Jim visited our office and was very excited. He said, “Guess what, Ben? I took your advice and put in my two-week notice.”
With that, Jim said goodbye and left happy as can be.
Now, you may be wondering why this was such bad advice. After all, the plan was financially sound, and he was certainly ready to retire — on paper, that is.
Three months later, Jim and his wife came into our office for a review. Even though only a few months had passed, he looked as if he had aged three years. I could immediately tell something was wrong.
As we talked, I learned that all of Jim’s friends were his former co-workers. Now that he had retired, he was spending most of his time alone, watching television while his wife was at work. Besides a small amount of yard work, he was bored and had no plan. Additionally, because he had such a physically demanding career, his new sedentary lifestyle was negatively affecting him. He was inactive, sleeping later and moving visibly slower.
Mentally, he was already slower and seemed disengaged from life. He certainly wasn’t the same upbeat man who had strutted into my office celebrating his retirement. He seemed like a man disconnected from his purpose.
Without realizing it, Jim had left his purpose at work and didn’t have a new one to take its place. He didn’t retire to a fresh purpose, but rather from his old one. In essence, it was like he had moved into an empty house that he expected to be furnished. Reality did not match the dream.
What I finally understood was that Jim hadn’t initially come in to retire. He had been planning to retire at 65, and those three years would have given him much more time to process, to slowly say goodbye to his friends, and to prepare mentally for his retirement.
Jim helped me see that preparing well for retirement means far more than financial planning. To truly serve clients holistically, advisors should work with them to create plans that address their purpose, relationships, health and legacy.
Simply put, if you don’t address the non-financial issues, the financial ones will not matter.
