The upside of postponing retirement

We called it "counselor selling" back in 1981. I was a raw rookie in the life insurance business, but I understood it to mean we didn't sell on the first visit. Counselor selling meant meeting to listen, collect facts and assess needs. In subsequent interviews, we educated, proposed and implemented. At policy delivery we resold the product to make sure the customer understood.

I don't know about you, but I feel more like a counselor since the market downturn than at any time in my career. My clients aren't asking questions about products. They are asking, "What am I going to do?" and "Will I ever recover?"

More than a few are faced with the real possibility of postponing retirement or changing careers after retirement to continue to earn a paycheck. With retirement assets reduced by 30% to 40%, the income won't be enough to make the original plan work. What do you tell someone facing such drastic changes in their planning?

The recession/correction has laid waste to the retirement plans and the plans to retire of countless baby boomers. As professionals we look at the numbers, and rightly so. To our clients, this economic tsunami is more than negative numbers. To them it means sleepless nights, tension, stress, worry and broken dreams. The quarterly statements bring one question after another, and they all have to do with the future. This is real pain, folks.

Portfolio rebuilding

There is no shortage of articles, seminars and ideas about portfolio rebuilding. It's even a sub-specialty of our profession now. "Hello, I'm John Smith with Smith Insurance and Investments, and I am a portfolio rebuilding specialist." I don't want to minimize the importance of wise and useful strategies for helping investors rebuild their wealth after the downturn. For this article, let's set those discussions aside in favor of a more provocative topic. It's a topic I'm afraid we will have to address with many of our customers.

My supposition

I have long suspected, based solely on personal observation, that retiring wasn't all that good an idea. My dad called me two months after retiring at age 65 to say, "Fishing isn't all it's cracked up to be." He went to work in an entirely different field for an additional 17 years.
I'm firmly convinced that extra career is part of what helped him live to age 93. We've all known individuals who quit working after vigorous and productive careers only to die within a couple of years. I agree this is antidotal, but let's look at history.

For generations, family patriarchs and matriarchs stayed active in everything from the family kingdom to the family farm. What they couldn't contribute in physical effort they more than made up for in wisdom and experience.

History is full of examples of people who explored, invented or accomplished after the "mandatory" retirement age. One of my favorites, Ronald Reagan, was within weeks of turning 70 when he was inaugurated the 40th President of the United States.

Some of the most effective and productive life insurance agents and securities representatives I know are over 65, and it would be a huge loss to their clients if they were to hang up the briefcase.

As the recession appeared and the market correction began to wreak havoc with retirement plans, I started to look more intently at my proposition. Should we retire? That was my question. I'm not going to bore you with publications and page numbers, but as I researched the whole idea of retirement I found that quite a few people were making a case against retirement. Psychologists and sociologists suggested that work ads value and purpose to a human being. Some even suggested that after working for four decades, only to be told one day you didn't need to, or couldn't, work anymore might even be traumatic to some. Hmmm? Was I on to something?

Then I broached the subject with my personal physician. He has been practicing internal medicine for over 20 years, and like all primary care physicians, the majority of his patients have AARP membership cards. He was excited to talk about this because he had just been to an Alzheimer's symposium. The experts there had instructed these physicians to encourage their patients to continue to work. I don't understand the details, because most of it was doctor jargon. The intriguing thing to me was that the medical profession was actually giving credence to my supposition. Maybe we should continue to work if we can.

Reality

Let's get a couple of things straight. I'm not suggesting we all start giving psychiatric advice. I'm not suggesting we should try to counsel the stress, remorse and fear our clients are feeling. In fact, we should be encouraging them to get whatever help they need to cope. That said, there is a reality we cannot and must not ignore. Many of our clients have suffered great enough losses in their portfolios that they will have to modify their planning and postpone their retirement.

As objective professionals who have the best interests of our clients at heart, perhaps we should approach this reality by arguing that postponing retirement may not be such a bad idea. A search of the Web, a conversation with your own physician, a chat with a trained counselor, and some late-night reading might be in order. It's always a good idea to have some facts, but in the end common sense will suffice.

Here are some questions you can use with a client who has accepted the fact he or she will retire a few years later than they planned:

o Do you like your job?
o Can you do some consulting?
o Would a competitor like to have your expertise?
o What would you really like to do if money was no object?
o What is your dream job?

If a person likes what they do, the option to continue that work may not be disappointing. On the other hand, if they like their job but hate their fellow workers, the option will not be as attractive. If they have a mandatory retirement age, like airline pilots, then the question is moot.

If they can consult for their former employer, the income will continue but the benefits will stop. If your client qualifies for Medicare, then an inexpensive supplement will fill the bill.

In some cases, the competition will want your client's talents and abilities. Non-compete clauses may come into play, of course. The grass may not be greener on the other side of the fence, but at least the income will continue.

Maybe your client has always had an interest in something entirely different than his chosen profession. Perhaps an architect has always wanted to work on cars, or a banker has always had a heart for nursing home residents and wanted to work with them. Maybe taking a cut in pay while utilizing part of the retirement plan to make up the difference in income would make retirement possible.

The dream job may be working with a non-profit or being self-employed. Because your client must continue to work for a few years past his targeted retirement date, why not suggest he work at what he has always wanted to do?

Bottom line

Every one of us should devote ourselves to offering the best advice possible regarding the rebuilding of our clients' portfolios. If the reality for a given client is that he must continue to work for a while, perhaps we should let him know there may be benefits to that reality. Working might contribute to better physical and mental health. Working might contribute to his sense of well-being because he is finally able to do something he has always wanted to do.

Sometimes when a dream gets shattered, it opens the door for another to be fulfilled.

Phillip H. Palmer, ChFC, is president and CEO of First Independent Financial Services, a FINRA member firm in Tulsa, Okla. He is a 28-year veteran of the financial planning industry.