Retirement Planning From A Psychologist’s Point Of View

We always talk about the money side of financial and retirement planning. But what about the mental aspect of that big life change? Today we’ll break down an article written by a Licensed Professional Counselor (Kate Schroeder) for Psychology Today, titled The Psychological Investment In Retirement.

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Transcript Of Today's Show:

Speaker 1: Hey everybody. Welcome into the podcast. It's time for another edition of Plan With the Tax Man with Tony Mauro and myself and we're going to talk about retirement planning from a psychologist's point of view. Often we talk about the X's and the O's, but sometimes it's important to talk about the opposite side, not just the money side of things. And so we've got an article here that we're going to reference, and we'll throw that in the show notes as well if folks would like to check that out. The Psychological Investment in Retirement, that is the name of this book by a licensed professional counselor, Kate Schroeder, hope I'm saying that correctly, of Psychology Today, so that's on topic this week on the show. Tony, what's going on, buddy, how are you?

 

Tony Mauro: I'm good. Rolling into fall. Getting a little cooler here, and days are getting shorter.

 

Speaker 1: Yep. It's that time of the year, it's winding down, but that's okay. I think a lot of us are looking for it, for '22 to be over.

 

Tony Mauro: Some people are.

 

Speaker 1: It's been a challenge, across many platforms.

 

Tony Mauro: Yes it has.

 

Speaker 1: We'll see how it goes. And this is a challenge today because for some reason, you and I were laughing, I can't seem to say psychology very well. I keep tripping over it, but that's our topic today. And it's actually a pretty good conversation piece because the transition from what you've been doing all your life for many people to something totally new is tough. And you guys have to tackle this stuff as well, as financial professionals. We've got some key points to analyze from this article in the podcast. Let's just dive in because there's a few of them, Tony, and run through some of these. So few people consider the consequence of walking away from the life, the routine that maybe defined them for a long time. And you've been doing this a long time. You've been doing this, what 25 years or so?

 

Tony Mauro: Yeah, 26.

 

Speaker 1: 26, so I know you probably encountered a fair number of people who you can kind of identify that, that hurt, that's really bugging them. They're really struggling with, this is who I was. The guy or gal that went to X job and did X thing, that's who I was. Now, who am I?

 

Tony Mauro: Yes. And to speak to the article, I've read the article and for those who are inclined to go out and read it. But the interesting thing is, is this is a psychologist, not an investment professional, who's writing these articles and they're seeing it in their own profession. And we see it too. But people say, "Oh, you guys are all the same. You all say that." This is somebody outside the industry, that they see this and this is what we see a lot, all these things we're going to talk about is what we see a lot of. And it doesn't have to do with the numbers per se. But to your point, you just picture yourself, you've done something 30, 40 years. It's a routine, whether you're in business or working for somebody else and all of a sudden, boom, that stops, and now it's... People come to us, a few months into retirement, basically saying, "I need help because I don't know what to do with myself. And my routine is not there anymore. I don't have the same type of meaning. Feels like life is going on without me." And so we try to work with people to try to deal with that before this happens, to kind of let them know from this psychological standpoint, that some of these things are going to happen and it's normal to feel this way.

 

Speaker 1: Sure, yeah.

 

Tony Mauro: And you've got to work through it and plan for it, just like you were planning for all of your numbers is what we tell them.

 

Speaker 1: Yeah. It's just like thinking about your child going off to college. Everybody's going to be different. There's some parents that struggle heavily when their child goes off to college. We all miss them of course. But there's some that really take it, have a hard time with it. And then there's others who are totally fine. I thought for sure, my wife was... We have just one child, so I thought for sure, and they're super tight. I thought she was really going to have a heck of a struggle. And she didn't. She was like, "Wow." she's smart, I trust her, we've raised a good kid and she did not struggle like she thought she was going to. Same thing with retirement. Some people will get there and they're like, "Hey man, I'm totally ready to let the old me go." And others can't seem to do that. There's definitely some psychology to that conversation piece. That's a great point. That's the first one. The author also talks about, says the research, show that the number one thing that retirees struggle with, is finding that consistent, genuine or lasting, maybe meaning or purpose. We talk about the number one financial fear is running out of money. Well, it seems as though the number one mental fear is, what do I do with myself? I need something purposeful. And I think you and I have talked many times about, Tony, retiring to something, instead of from something.

 

Tony Mauro: Exactly. And it's an important part of the planning process as well, to at least get some ideas in your mind about what you're going to do to find meaning, whether it's doing some work just for some, what I usually use the term mad money, just to have, or maybe it's volunteering at charities, maybe it's traveling, maybe it's spending time with family or a combination of those obviously hobbies and things like that, stuff you always wanted to do, but maybe never had the chance to do in your routine and in your work life. And maybe there's an opportunity to do some stuff like that. We make clients make a list of some potential things that they may want to do and we keep it and we talk to them about it when we're doing reviews. And some of them say, "Well, no, I decided I don't want to do that." We just X that out and go on. But it's important, it's almost like holding them a little bit accountable. They don't have to do anything if they don't want to, but then they start losing that meaning of life and some of them get depressed and things like that and that's definitely not the way you want to spend retirement, assuming you got your health and everything.

 

Speaker 1: Yeah, I think we view it... Well, my mom's almost 81 and she views, she's like, "Well, when I lose the ability to drive, I'm just going to sit around and wither away," kind of thing. Same kind of idea, when I think when we first get to retirement, we feel like the purpose is or at least that's been the norm. I think that's been the big fear, is that we feel like it. But I think the modern retirees, were much more active. There's much more going on. There's many more things to do. We're living better overall, so I think a lot of that does get dissipated. COVID certainly brought that back to the forefront with lockdowns at the time, because I know they weren't necessarily prevalent in your area, but still, feeling as though, "Well, I can't go anywhere," kind of thing. I'm going to move around a little bit here on the list just to, in the interest of time. But because I feel like the next point was pretty similar to the one we just talked about. But many people kind of view that break, that time off, as a stressful period because they're not productive in something. And again, when we talked about retiring to something, it doesn't necessarily mean, there's a lot of folks want to retire and they're like, "Hey, I'm going to sit on my butt and do nothing because I've earned it," and that's cool. But I think most of us find after maybe a couple of months max, we're like, "Okay, I'm bored. How much longer can I do this? I got to have something to do." Whether it's a project you've always wanted to tackle, that you just haven't had time for or volunteering or whatever the case might be, but eventually as humans, we crave some kind of structure.

 

Tony Mauro: Yeah we do. And it's that, I say three months max, I think you're pretty close on that, that I see people coming back when they say that, because everybody, especially during tax season, if you're getting close to retirement. They say, "You know what? I need a break. I've been working for 35, 40 years. I just want to see what it's like to do nothing." And within three months, even if they're not a wealth or financial client, they're calling saying, "I am bored. I've got to do something."

 

Speaker 1: I cannot cut the grass one more time.

 

Tony Mauro: Nope. For me, I was just playing golf this weekend with some buddies. They are a little older and I was telling them in retirement, I don't think I could play golf seven days a week. I love the game, but it's just too much of one thing for me. But the important thing really is to try to, again, come up with some of this stuff before you retire so that you might be able to take a couple months off, yes, but then you've got to find some things to do and give yourself some purpose.

 

Speaker 1: Yeah. Well just like saving money, the earlier you start, the better, in this transition, this mental hurdle of switching over in life. Let me ask you a couple of follow up questions here from just this information. And again, we're going to post the link to the article if you'd like to read it folks, but how it relates to what you've seen. How have you seen clients mentally prepare anything? You've been working with a client and you're like, "Wow, that's a good little idea they had." Or anything that kind of jumps out at you is that you've seen for a person transitioning from the working years to the retirement years?

 

Tony Mauro: Well, we try to advise them, we start if they will do it, a couple of years before retirement. Let's start making a list, just throw some stuff on a piece of paper, we're going to get it in your file. And we'll massage it over time as you get a little closer. And you'd be amazed at some of the ideas that people pop up with. One lady wanted to raise bees and be just a beekeeper for a hobby.

 

Speaker 1: I've heard it's much easier than we originally thought it was, growing up.

 

Tony Mauro: I think it actually is.

 

Speaker 1: Yeah, I've heard some people say it's actually a lot easier.

 

Tony Mauro: She wanted to do that. Another lady wanted to, and she's actually retired now, but her number one thing is, is she loves to put her time into her home and she joined a few groups. I don't know, retirees that are looking to improve their homes. It's a odd little group, but everything from gardening to just kind of little fixed up's here and there, but it's more social than anything else, but she's found her happy spot, so there's things like that. There's the hobbies of golf, travel, things like that. For me, I know one would be to immerse myself more into one of my passions, which is wine. It kind of gets put off, type of thing, but we try to get them started a couple years before and then as they get closer and closer, really try to whittle it down to stuff they really think they want to do, and then they go out and try it, and some of it is, "Now, I don't like that. I don't like that at all," and that's totally fine.

 

Speaker 1: Well, you think about, I know many advisors will say, "Hey, listen, as we're getting closer to retirement, let's try to..." You set up the budget or for lack of a better word, you set up the spending plan and you go, "Okay, let's try to really watch this and live as though we're in retirement, almost a trial run." Many advisors say, "Let's live in retirement, let's live a few maybe months or whatever beforehand, in retirement." Maybe try thinking about that from the mental aspect as well. The aspect of, what am I going to do if I'm not going to the job every day? Just kind of think about that. Have you seen clients that do struggle though? Have you had the ones that you've really had to help them through that hurdle of, "I don't know who I am, Tony, without my job," and what did that look like?

 

Tony Mauro: I'd say probably 50, 60% that fall into this, that struggle with the transition. At least our clients and what pulls a lot of them out is as soon as they either go back to work part-time, even if it's just, I hate these words, mindless job, but not a lot of responsibility, but something that gives them meaning or they find a hobby or something that they can do, that's what pulls them out. Generally, our role is to kind of just be there to lean on and say, "Well, you had this on your list. Why don't you try it? Give it a shot and let's talk about it." There's nothing to do with money. It's really just, are they happy? And that's kind of the role we play, so really I guess, just a sounding board, see what they like and once they find something, you could tell they like it, because all they do is talk about it, and I don't have to say anything.

 

Speaker 1: Yeah, you have to wear multiple hats and counselor is one of those sometimes. Did you think you would be intentionally including this or including this kind of, I suppose softer side, if you will, of planning alongside the financial elements that you do, or was this something that kind of caught you by surprise as you started doing more and more with your practice through the years and realizing, I need to help them with the mental hurdle as well?

 

Tony Mauro: Yeah. I think for us as advisors, when I was young, I never dreamt that I would be talking about this kind of stuff with clients, but-

 

Speaker 1: It's just X and O's, right?

 

Tony Mauro: Yeah. As I've aged and as they have, I realized, well, this is what they're looking for. And to really round out the process, in my mind, it makes sense to help them with this as part of the whole process. I don't see why we would say, "Well, we can't help you with that, you've got to go somewhere else."

 

Speaker 1: Yeah, no. It's just not something that you expected, right?

 

Tony Mauro: Yeah. And definitely not something I expected though. Yeah, its definitely something-

 

Speaker 1: I think we all find that with any job, wow, this is an aspect of it I did not expect to have happened, but there it is, good stuff. Anything else that I think as we wrap it up this week, that'll do pretty well. I think folks, like you said, check out the article, certainly very interesting. And then think about just your own, if you're getting close to retirement or you're a couple years out, think about what that transition looks like. Are you going to feel okay when it's no longer your routine? I think the routine and the identity that gets wrapped up in it, is the big one.

 

Tony Mauro: It is. And if you are working with an advisor, I would encourage you to make sure that you start asking about some of this stuff and use them as a sounding board.

 

Speaker 1: That's true, because they've seen a number of people retire, whereas hopefully this is our only retirement. Hopefully we're doing it once where you've helped hundreds of people do it. A little bit of insight there. Cool, good conversation this week, a little different. Thanks for hanging out with us here on Plan With the Tax Man. Folks, don't forget to check out the article, again, we'll add it to the show notes. It'll just be a link there you can click on. And if you've got questions or concerns, need some help, as always, please check with a qualified professional like Tony and you can find him online at yourplanningpros.com. That is yourplanningpros.com. You should always check with a qualified professional before you take any action on something you hear from this show or any other, so make sure you do so. And again, you can find more information about Tony Mauro and his team at taxdoctorinc@yourplanningpros.com. That is yourplanningpros.com. We'll see you next time here on Plan With the Tax Man.

 

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