Trending
Financial advisors excel at guiding clients through the complexities of planning for a secure and fulfilling retirement. But what happens when circumstances out of their control force clients into an unplanned early retirement? Job loss, layoffs, or the need to care for a loved one can upend even the most meticulously crafted retirement strategies.
In the face of these challenges, advisors can provide invaluable support to clients as they cope, recover, and reboot. A recent analysis by ProPublica and the Urban Institute sheds light on the startling reality that over half of older U.S. workers (age 60+) are forced out of their jobs before they choose to retire, despite laws against age discrimination. This underscores the importance of having a trusted advisor who can offer guidance as they tackle the emotional and psychological aspects of unexpected retirement together.
Getting Your Financial House in Order
The financial advisor might not be the first person to get the phone call from the recently-fired client, but hopefully they are in the top ten to hear the news and be able to offer guidance and support.
“Getting fired is a gut-check for most folks,” says Walpole, Mass.-based financial advisor Dick Power of Power Plans. “I first empathize with them and then then shift to facts we must deal with. I let them vent. They need someone to talk to, so I just listen.”
Power adds, “As a financial advisors we mostly work in is the needs and sources of income. But I also discuss what they might do with their newfound freedom from having to go to work each day. There might be some expenses that go away and there might be ways to make lifestyle adjustments. There might be revised Social Security claiming strategies and usage of qualified retirement accounts that weren't scheduled to be tapped at this time but now come into play.”
For Power, a retired Army Colonel, business exec and advisor, it all about pulling two levers: saving and spending. “You need to look at potential income sources to tap into such as Social Security, pensions, deferred compensations, rental property income, and personal savings. Many clients have more resources that they initially perceived that can help bridge certain income gaps.”
The next lever is cutting down on spending. This means working with an advisor to redo a budget and make appropriate cuts. “I had a client that was spending over $2,000 a month going out to eat. So I told them to cook dinner at home a few times a week to save some money,” says Power.
Helping Clients Accept the New Reality
For advisor Geoff Owen of Front Porch Financial Advisors in Charlotte, NC, forced retirements are all about helping clients accept their current situation, process emotions, and look at the hard facts.
Owen recently helped several clients work through the process of being “constructively fired”. With these clients, he first gives the client some space to digest the shock and helps them accept tough emotions of anger, betrayal, and fear. “This has happened to several men in my orbit lately, all with the same theme --- early to mid 50's, high paying C-level job, inopportune time (like kids in college or dealing with aging parents).
Front Porch Advisors has a 4-step process to help recently fired (or laid off) client. They discuss 1) employee benefits from the former or soon to be former employer especially if the sendoff is still under negotiation, 2) budgeting 3) exercising good habits to work towards reemployment (e.g. setting target contacts and tasks to complete even when getting negative responses repeatedly) 4) revising the financial plan to reflect the reality of this unexpected adjustment and building in worse case scenarios (e.g., what if you never worked again? what if you found employment again but were never able to crack the C-level pay again?).
Some clients have a tough time processing all these emotions, feeling vulnerable and asking why me? In these cases, Owen, a CRP® and Registered Life Planner® professional, shifts his focus to 90% emotional support vs 10% financial. He reminds clients that times like these are the reason you have a 6–9-month emergency fund and he underscores the importance of bringing the spouse or partners into the discussion. “After all, this is often about ‘marital money’ and it’s important that both partners are on the same savings and spending page.”
Yes, It Can Happen To You
Although seasoned professionals may have been top performers, in some industries, you can never feel comfortable and complacent. Financial advisor Mike Murray, president of Peabody Wealth Advisors, north of Boston, had a client who had worked for the same US car company for the past 32 years and was a fiercely loyal advocate and promoted the brand at every opportunity.
Last year, the company announced layoffs and Murray’s client figured that he would survive this one as he did many times before. There was a meeting discussing the restructuring that he was always invited to during past layoffs that he was left out.
“He called me and said he thought something was up. The next day, security marched into his office and told him he had 30 minutes to clear his desk out and they would escort him out of the building along with the others that had been let go,” explained Murray.
“Even though he had an idea that it was coming, he was still devastated. The next day I met with him and his wife to talk about how he was feeling. Working for this company was a huge part of his identity, so I treated the loss on the level of losing a loved one, a divorce or losing a family pet. His emotions ranged from disbelief to anger to disappointment,” says Murray.
Murray underscored the fact this layoff was not his client’s fault. It’s just business -- a risk for long-term employees at large corporations who are looking to cut costs. Murray emphasized that with his client’s skill and experience he could work elsewhere, but with severance and their retirement savings, he didn't need to work but could if he chose not to.
Together they focused on the mechanics of making sure their retirement savings were going to be allocated properly in order to last over the next 40+ years. Fortunately for this client, the healthy severance included pre-retiree medical, lifetime automobile benefits, vested RSUs and a Cash Balance DB plan. Murray advised the client of his options with the Cash Balance DB and they decided to roll the proceeds into an IRA because the new interest crediting rate was going to reduce the cash balance by over $200k due to rising interest rates and the client wanted control over the funds.
Emotional Support: Call in the Retirement Coaches
In response to the emotional challenges faced by clients who have been fired or forced into retirement, many advisors are collaborating with retirement coaches. These professionals help clients navigate the complex emotions that arise from an unexpected transition, which often parallels the emotions experienced by individuals entering retirement willingly or unwillingly.
Rhonda Fekete, a Professional Certified Retirement Coach at Career Pointe Consulting in Columbus, OH, notes that anger is a common initial emotion when individuals are fired, especially if there was little to no warning. Fear and anxiety soon follow as financial stability concerns take center stage.
Fekete, a member of the Retirement Coaching Association, explains that taking immediate action can help clients regain a sense of control in the face of sudden job loss. "It is difficult to put in the work required to find a new job, especially when emotions are running high," she says. Retirement coaches can guide individuals through these challenging emotions, enabling them to focus on the necessary steps for moving forward.
Lastly, grief and sadness also arise, not just because of the job loss itself but due to the loss of social connections and the structure that having work and a daily routine provides. This is where creating a strategy for finding a job with predetermined daily activities whether networking, spending time on job boards, and refreshing their resume can support the loss of work structure, says Fekete.
Helping Clients Reinvent Themselves
Chief Retirement Coach at Buoy Coaching Larry Jacobson shed light on the obstacles encountered by clients who have been laid off, highlighting a situation where a 60-year-old client lost his Bay Area tech job following a company reorganization. Despite possessing vast experience and expertise, the client found it challenging to secure new employment, confronting ageism head-on in the competitive job market.
After hundreds of applications and disheartening interviews with younger hiring managers, they started exploring different career paths. This entailed contemplating lower-paying jobs, pushing the client to grapple with his identity and self-worth, akin to a star athlete considering a less prestigious role on the field.
To keep the client motivated and resilient, Jacobson guided him through discussions about transitioning to emerging fields such as AI. While this presents a demanding learning curve, it could yield better prospects in the rapidly-changing job landscape. They've also discussed freelancing, which carries its own unique hurdles.
Reflecting on the lessons learned, Jacobson advises professionals to proactively strategize for potential career shifts and, when feasible, initiate early discussions with their employers. This proactive stance can help reduce the fallout of involuntary layoffs and pave the way for a smoother transition into the next chapter of their professional journey.
Helping You Embrace Change
Being forced out of a job can also be a great opportunity to hit the reset button, says retirement coach Joanne Waldman, president of St. Louis-based New Perspective Coaching.
Her go-to strategy for recently-fired employees: get them to think out of the box. She works with clients to refocus on the benefits of losing a job and asks them to make a list of what activities will bring joy, meaning and purpose to them at this stage of life.
“How can you be creative with change?” she likes to ask. And “What’s something you always wanted to in terms of volunteering, work, leisure, or hobbies?”
“Advisors might be surprised to learn that sometimes, people are excited, relived or happy to be forced out,” says Waldman. “When you see this job loss as an opportunity, it can be a real gift. And as a retirement coach, I help people brainstorm possibilities, spark new avenues of growth and focus on the things they will gain after the transition,” explains Waldman.
For example, one of Waldman’s clients always wanted to do glassblowing. So they worked together to help the client leave a corporate job, start a glassblowing business -- all while creating a consulting business (based on their prior corporate expertise ) to pay the bills.
It’s no secret that many people don’t retire when they want to. With over half of older U.S. workers facing forced retirement, advisors must adapt to provide tailored strategies to address the financial and emotional challenges. Collaborating with retirement coaches helps clients navigate complex emotions, regain control, and focus on moving forward during turbulent transitions.
Related: No G2 or G3? Financial Planning Without Future Generations