The Pressure to Retire
Once again, I caught myself having a conversation with…myself. The topic this time is why does everyone pressure people into retirement.
Question – So, you go sit in a tree once a year?
Answer – Yes.
Q – Do you spend your time looking at your phone? Maybe listening to books, etc?
A – No. I often have no cell signal so it’s pretty nice.
Q – What do you do then? Think?
A – Actually, I do spend quite a bit of time thinking.
Q – Any deep thoughts hit you this year?
A – One kept rattling around my old noggin’.
Q – Well, care to share this great thought?
A – It isn’t so much a great thought as an observation.
Q – Get on with it. What was this observation?
A – Truth be told, why the hell is there so much pressure for people to retire?
Q – Um, don’t you want people to retire? I mean, you are a financial planner, right?
A – Yes, I am a financial planner. However, it just seems like there are non-stop messages hitting Boomers that they must retire as soon as they financially can, or hit 65, whichever comes first.
Q – I think you are exaggerating with the non-stop messages.
A – Do you watch any sporting events on TV? Maybe go to a concert or two? Get mail?
Q – Hey, I’m asking the questions. But, yes to all.
A – The Rolling Stones tour this year was sponsored by a national annuity sales organization. Not sure what they paid to sponsor the tour, but rest assured the high premiums attached to most annuities will cover their sponsorship.
Q – Okay, so one example.
A – Pardon moi, permit me to continue. Do me a favor and count the number of financially-related commercials the next time you watch a college football, NFL, NBA, MLB or any other sporting event. It is a continuous stream between annuity companies, investment firms, banks, insurance companies and more. And if you’re 50, track how many dinner seminar invitations you receive in a month. There is a reason the financial services industry has tripled in size over the past few decades.
Q – Everyone has to market. I get it. But, what is your point?
A – That’s what I’m not sure of. I just keep thinking maybe these companies don’t have their clients’ best interests in mind when they are pressuring them to retire. Sadly, most advisors and companies don’t get paid unless there are assets to manage or high-commission products to sell. You need to encourage people to retire so these assets are then available to charge fees of 1-2% a year on. And don’t get me started on sales commissions. To me, the incentives are all wrong.
Q – True, but you’re kind of an odd duck when it comes to how you charge your clients.
A – Right. Because I charge a flat-fee there is no incentive for me to push a client to retire so that I can manage his/her assets and then make more. It’s more a conversation of whether they are ready financially and mentally. And being mentally ready to retire is so important and often overlooked.
Q – Is it really that bad out there?
A - Sadly, I’ve heard too many times from advisors – “I can’t wait until X client retires at 65 and rolls that 401k balance to me.” There is rarely a conversation about whether it really is right for the client to retire.
Q – So, what’s the solution?
A – Unfortunately, I don’t have a great one except continue to offer a comprehensive financial planning and wealth management at a flat fee and do what’s right for my clients. You know, be a true fiduciary. Oh, and maybe spend less time sitting in the woods. Or more.