Having spent my entire career in the financial advisory industry, and now as a retirement coach and a member of the Retirement Coaches Association, a recent article in the Journal of Financial Planning titled Time Allocations and Self-Reported Happiness of Retirees: An Exploratory Study, grabbed my attention.
Each year the financial advisory industry produces a number of excellent research studies on a wide variety of topics. For those studies looking at providing greater value to clients when planning for retirement, most are focused on the financial side of retirement. What caught my attention about this study was it focused on how retirees spend their time in retirement and which activities bring them happiness. As the study points out, having substantial assets doesn’t guarantee happiness (or success) in retirement. The results of the study, and its importance to retirees, has nothing to do with money.
The research study indicates the importance of planning for the non-financial aspects of retirement. In many cases, these non-financial aspects are as important, if not more important, when helping clients plan for a successful retirement- to help them find happiness in retirement. Isn’t that what each of our clients is seeking in retirement- happiness?
Whether you are a financial advisor working with clients who will retire at some point during their lives (just about every advisor), any HR department that wants to provide better information for employees (should be all companies), a retirement coach wanting to help clients, or individuals planning for their own retirement, the article provides excellent information to help individuals lead a happier retirement.
Following is a summary of the most salient and actionable points of the study findings.
- Retirees prefer activities such as socializing, exercising or walking in addition to activities that require us use our minds (human capital) such as working or volunteering. In the study, these are referred to as “active” activities. Active activities were much preferred by retirees as opposed to “passive” activities such as watching television or staying at home- particularly being alone having little or no socializing.
- Retirees want to participate in active activities more as they age while spending less time on passive activities. Although this seems counter-intuitive, the authors believe this is because after working a long career people initially want to spend more time on passive activities since they didn’t get to participate in these passive activities. However, after the enjoyment of the passive activities wears off, retirees again want to pursue more active activities.
- There is a gap in how retirees are spending their time and how they would like to spend their time. Study respondents are spending more time each day on passive activities but want to spend more time on active activities. This gap indicates that retirees could be leading a retirement that is leading to less happiness than is possible.
- The amount of a family financial resources did not appear to change how individuals allocated their time. Having a larger portfolio did not lead to greater happiness.
The authors of the study point out several implications for financial advisors working with clients.
- Understanding the relationship between time allocation and happiness from retirees nationwide can help us learn which factors have an impact on retirees’ well-being.
- When working with soon-to-be retirees, we can be more intentional about having conversations with clients and introducing and educating them on the benefits of optimal time allocation in daily activities and sharing the benefits of active activities.
- As the authors point out, “These types of life planning and retirement coaching could be an essential part of the services provided to the retired client.” I would say these SHOULD BE an essential part of a financial advisory firm services, especially if your firm focuses on helping clients plan for retirement.
- Financial planners can help identify clients with an increased risk for social isolation and chronic loneliness and offer additional guidance. Knowing client’s situation intimately puts advisors in a unique position to provide assistance by pointing clients to additional resources.
- For clients who are divorced, widowed, living or home alone, or spending much of their time watching television, planners should consider in engaging in conversations with those clients about ways they can rebuild their social network to avoid isolation and its associated affects.
- Providing tools that help retirees track their time use and maintain a healthy lifestyle also could be beneficial.
In addition, we need to provide guidance and accountability in addition to providing education and tools on the topic.Â This takes creating processes and planning tools to help monitor each clientâ€™s situation for potential challenges and opportunities in order to assist and guide them appropriately.
For financial advisory firms, the findings provide opportunities. Helping clients create a plan for allocating their time is as important as helping them create a sizable portfolio. Think of it as helping them create a separate portfolio for the qualitative aspects (time is one of these) as well as the quantitative aspects of retirement. These two parts create a solid plan for retirement
As a retirement coach, a few things jumped out at me from reading the article.
First, from what we learned from the study, it is important to guide clients toward daily activities that are more active in nature- which in turn lead to greater happiness.
Clients need to think about and plan what activities they want to participate in that allow them to be more active. To help them come up with a list of active activities, clients need to take the initiative to put this list together. Another way to help them is to provide guidance on putting this list together and holding them accountable for following the list. That is why there is a gap between what retirees reported spending their time and how they were actually spending their time. Knowing how you want to spend your time and how you actually spend your time are two very different things! They often need help with the guidance and accountability for following through with creating and doing what is on the list.
Second, planning these active activities needs to fill most of our time (with some time for passive activities).Â Planning active activities for each day, seven days a week, four weeks per month, twelve months per year, year after year, takes some serious planning. It is much easier to plan for and carry out the first few months of retirement and to be happy. It takes much more thought and planning to carry this happiness throughout many years of retirement. Again, finding someone to help provide guidance for this type of planning and to provide the support as well as a nudge, when needed, often takes the help of an additional resource.
Third, because there is a gap between how retirees are spending their time and how they want to spend their time, communicating about how to fill their time needs to be initiated with retirees.Â Discussing this topic with clients and providing guidance is important to helping clients lead a happier retirement. Â This needs to happen well in advance of retirement.
Lastly, as the article points out, â€œThese types of life planning and retirement coaching could be an essential part of the services provided to the retired client. As I mentioned earlier, it is as important to help clients plan for the non-financial aspects of retirement as it is to help them plan for the financial aspects. Having enough money at retirement, as the study points out, doesn’t mean clients are allocating their time any differently. In other words, having more money can still leave people unhappy.
Although the study was focused on the implications for financial advisors, many of these points have similar implications for HR professionals. Both industries work with individuals planning for their time in retirement and have a huge opportunity to provide some level of guidance. Retirement coaches work with individuals and can help financial advisors and HR professions educate and provide guidance to their clients and employees.
Let’s all help retirees lead a happy retirement.
If you want additional information to transition successfully into retirement, please visit MyLifesEncore.com. I would enjoy partnering with your financial advisory firm or company to provide education and guidance for your future retirees. Individuals planning for retirement can contact me for on-on-one coaching. I also conduct group coaching for small or large groups and speak on these topics if you need a speaker. Contact me to find out more about these options.