Lewis Carroll started Alice’s journey into Wonderland by having her fall down a rabbit hole. Maybe you’ve gone down one of these yourself: found yourself in a complex and frustrating situation you hadn’t imagined when you took a simple wrong step.
For instance, have you ever worked on what you thought was a simple home remodeling project and found it to be more complex and expensive than you’d imagined? Or maybe you simply got sucked into watching a series of YouTube videos that took you barreling through multiple topics far afield of the one you started with. Politics these days offers another rabbit hole—when people follow complex theories about the validity of the presidential election, for instance, or the speed and delivery of the Covid-19 vaccine or the stimulus payments, or when they get pulled into the theories and ideas from either the so-called far left or far right.
The never-ending stream of information about these topics can amp people up with anger and resentment, cause spouses and even families to stop talking to one another, put undue stress on their health and well-being, and cause isolation. Which, in turn, creates more time and space for them to consume more information.
And finally, your clients’ retirement can also make them feel as disoriented as Alice after her fall. For instance, they might have started the process of taking a regular IRA distribution and found they’d started a chain reaction that affected their income taxes, health-care subsidies and Social Security benefits. One thing simply led to another; suddenly, they are falling, landing in a confusing place they aren’t prepared to navigate. Or maybe they’re dealing with an adult child who can’t launch or is recently divorced, and whose financial problems suddenly become their own.
Clients might not anticipate or even realize they’ve fallen down a rabbit hole until it’s already happened. They aren’t necessarily going to fall as hard or fast as Alice did. Sometimes it’s a slower process.
Most financial professionals can help clients work through the dollars and cents in these situations, but advisors are often less helpful with clients’ personal issues—their routines, relationships, health, quality of life, and relationships with adult children, even though these things can also quickly be thrown into disarray during somebody’s retirement.
Very few clients will foresee these pitfalls, let alone prepare for them. Most of them are preoccupied instead with their fear of exhausting their money or losing their current lifestyle, as one study by Charles Schwab shows. They haven’t really been told that there are other non-financial aspects of later life to worry about.
Over the last 10 years, I have gathered a variety of empirical data from my “Naked Retirement” workshops and classes. I found that you learn a lot about people when their financial worries are removed. Their biggest retirement fears then revolve around losing loved ones, losing their identity and staying connected. Running out of money pales in comparison to running out of family, friends, good health and time.
All of these things play a big role in how well people adapt to life after work.
What’s important for advisors is to be willing to open up the dialogue about the more personal aspects of retirement—to make them aware of the rabbit holes before clients fall into them.