As Australians enjoy greater longevity than ever before, financial security in our advanced years is becoming increasingly challenging. Planning for an undetermined period of time with unforeseeable events and expenses is difficult. No longer do people retire from their place of employment and enjoy 10 years of leisure; for the modern retiree, retirement is more likely to be 20-25 years.
TRANSITION TO RETIREMENT
While it’s important that financial advisers protect the financial wellbeing of their clients as they head towards retirement, their duty of care should also extend to an awareness of their client’s mental health and wellbeing.
Like all life transitions, the transition to retirement can be a particularly challenging and confusing time, with many of the stressors connected to the unknown. There are a huge number of considerations around money, how time will be spent, the length of retirement, and possible physical health problems that are all areas of concern and stress for many older Australian workers.
THE ROLE OF THE FINANCIAL ADVISER
When assisting clients with short and long-term financial goals, advisers are often among the first to know about any issues their clients are facing. As a trusted and reliable source of information, there is real opportunity for advisers to help clients plan for wellbeing that is not just financially focused when discussing their needs. Financial advisers are uniquely positioned to align a client’s financial assessment to a more holistic view.
A financial adviser helps clients to attain achievable goals with robust planning. During this process there are opportunities to review plans, design strategies and create realistic objectives. Unfortunately, many people neglect to apply the same rigour to planning for their mental and physical health, and the impact that a major life change like retirement can have. Thoughtful planning for all elements of health is an important step towards creating sustainable wellbeing in retirement.
IS RETIREMENT ONE SIZE FITS ALL?
Retirement is a key life stage that most people plan for financially, but it looks different for everyone. Talking about what retirement means to individual clients is an opportunity to really understand their goals, any resource gaps they may have, and what strategies need to be implemented.
Not everyone sees retirement as a move away from paid work. Many Australians plan to never fully retire; some transition to a different type of employment that creates greater personal fulfillment; others scale back their volume of work by taking on part-time roles; whilst many utilise skills gained throughout their career as volunteers and give back to their local community.
There are multiple benefits to continuing some form of work, including continued learning and development, physical and mental stimulation, greater opportunities for personal connections, and if paid, an ongoing income.
Many of the interactions and personal connections people have during their working life need to be replaced as they transition into retirement. Planning for this change creates confidence for the future and avoids feelings of isolation and loneliness in retirement.
When making financial recommendations or devising a strategy, it is vital that financial advisers understand the client’s requirements and discuss both short and long-term goals. It is here that there are opportunities to understand what level of planning clients are doing to replace the positive aspects of their working life.
WORKPLACE BENEFITS ARE NOT JUST FINANCIAL
Wellbeing in retirement is predicated by several factors, and research shows that the most important of these is quality connections. This is an area that is often overlooked when making the transition to retirement because the focus is on the initial list of activities that are planned immediately ceasing paid work. There are projects on the to-do list to complete, exciting travel plans, and days scheduled for rest and recuperation.
What is less obvious is the need to be mindful of the daily interactions that provide a connection to others. Taking stock of the number of meaningful exchanges that clients have outside of their workplace while they are still at work creates an understanding of where they need to focus their plans post-retirement. Work inevitably forms a big part of our identity and is quite often the main source of our social connection throughout the week. It is therefore important to have some plans in place to maintain these social connections in retirement.
This is also true of the nature of their work; if it is a particularly mindful role that requires deep thinking and focus, or a physical job that keeps them active throughout the day, in each of these cases there will be an adjustment required to maintain certain levels of mental and physical health. It is worthwhile discussing some continuous activities that may be fitting replacements for things that currently keep them active at work.
How people feel about their job, and their impact, satisfaction and energy levels at work are also indicators of how much will need to be replaced in the transition from full-time paid employment to full-time retirement.
The evidence is clear that the more planning people do to prepare for the transition to retirement beforehand, the better the outcomes for financial, mental and physical wellbeing will be. This, combined with recognising where they need to build up their resources and connections, and actively deciding on when and how they retire is the key to success.
STRATEGIES TO HELP ADVISERS AND THEIR CLIENTS
It is important that we recognise the impact that continued stress has on both the physical and mental wellbeing of financial advisers, too.
Advisers have stressful, demanding roles that the rapidly changing environment and media scrutiny has exacerbated in recent times. With this in mind, there are steps that can be taken to ensure financial advisers are looking after not just their clients, but also their own mental health and wellbeing at work.
Self-reflection on the impact that the recent pressure has had on personal wellbeing and employing some self-care strategies to help manage stress levels, build resilience and keep advisers functioning at their best is a good first step.
People who experience prolonged periods of high stress and poor mental health are not considered ‘thriving’, and therefore are generally not bringing their best selves to work. This may result in the unintended consequences of lower productivity and engagement in work, presenteeism or staff turnover, as well as further negative impacts to mental health and wellbeing.
It is important to ensure that financial advisers take time to look after themselves with some simple strategies that will help to maintain a good work/life balance.
This can include taking regular breaks at work, setting realistic priorities for each workday, making a clear distinction between work and home (and not being available at work outside designated hours), finding a time for physical activity, and trying to inject mindfulness throughout the day (mindful eating can be a good place to start). Staying connected to people who provide support is essential, such as by calling or texting friends and family, reaching out to an Employee Assistance Program (EAP), or contacting support lines like Lifeline on 13 11 14.
Michelle Dowling is retirement solutions manager at Superfriend.