We spend too much time on answers and too little on questions. What difference does the right answer make if it turns out to be the wrong question?
Let's look at a few questions that many clients ask and what the real question should be.
The right question isn't when do I retire, it's what do I want to be doing with my life? In his book, "Transitions: Making Sense of Life's Changes," William Bridges writes, "Every transition begins with an ending. We have to let go of the old thing before we can pick up the new one — not just outwardly, but inwardly, where we keep our connections to people and places that act as definitions of who we are."
Most of our clients who experience difficulty in retirement are experiencing challenges around their personal definitions of who they are. Clients who had a life filled with pursuits other than work generally have an easier time with the transition to retirement because they are less disconnected from the people and places important to them. If retirement is that point in life where you think you finally get to do what you want to be doing, you may be surprised at how unfulfilling it can be.
One of our clients worked into his mid-70s in a job that both consumed and fulfilled him. After being forced into retirement, he realized that he had not developed anything to match the experience he had from working. Not-for-profit board work was more frustrating than meaningful and his strong marriage and friendships provided support and engagement, but not the problem solving that he had come to love.
This transition from work to retirement marks an ending and a beginning, but the middle place is disorienting. Relating to the in-between time after work ends and the new life begins takes a tremendous intentional effort. The in-between time can be shortened if you are moving toward something, rather than from something.
Many of us are regularly making decisions around where we should live. But the question of where to live should really be with whom do we want to be spending our time. We work on shifting our clients from thinking about what they can afford to why are they think they want this. Where you live involves everything from your dependence on cars, to ongoing costs, to how you interact with your neighbors. One of our clients was talking about a recent move and how they know their new neighbors better than the ones with whom they lived for over a decade. While they love the community, they miss the privacy. While they love their new home, they are adjusting to the many changes it involves.
We place too much emphasis on concrete structure and too little on the structure of the rhythms of our lives. When you are making a decision about where to live, it's important to not only list what you want in a new home, but what you expect to get from living in it. But then don't stop there. Also create a list of what you are giving up and will be unlikely to replace. Even if you are ready for a change, you chose your current spot for a reason. Don't minimize what it will feel to leave it.
Oscar Wilde once said, "The Gods have two ways of dealing harshly with us — the first is to deny us our dreams, and the second is to grant them." We often are unprepared for the disappointment we simultaneously experience with joy when something good happens. We may even feel guilty about it. But nothing is ever all good or all bad. It is healthy to talk about these conflicting feelings rather than sublimate them.
Another question that is often incorrectly asked is how is my portfolio doing relative to the S&P 500, rather than will I have the money I want to spend when I want to spend it. The first question is about maximizing a return, but it doesn't consider the risks involved in doing so. The second question is about making sure that the risks you are taking are appropriate for your stage in life and risk temperament. Whenever you diversify, you are automatically trading a lower return but a more predictable outcome than the return the best performing category provides. This is hard to remember when markets are going up and you don't feel that you are fully participating.
One of our clients was a retired executive from a company whose stock had done very well. She was reluctant to part with it. She had enough resources that we could carve off a certain amount of assets to meet her lifestyle needs, regardless of how her concentrated stock position did. This allowed her to retain her position in the rest of the stock, even though outcomes from concentrated positions are often far better or worse than diversification provides. A couple of years into retirement, she realized that she no longer identified with the company and was more comfortable in gradually diversifying.
Getting to the right questions requires going beyond the obvious questions of what or how and getting to the more subtle questions of why. But once you can answer the why, the hows become easy.
Ross Levin is the chief executive and founder of Accredited Investors Wealth Management in Edina.