Here’s a twist on 401(k) participant education you may not have seen – Carosa
Plan sponsors use onboarding programs for new hires – but what about an “unboarding” program for employees nearing retirement?
Why do so many people prefer to wade slowly into a pool rather than dive suddenly into the deep end? The answer is contained in the phrase “testing the waters.” We aren’t sure how deep that deep end is, so we “test the waters” by gliding smoothly from the definitive shallow end to the unknown deep end.
This tendency towards tentativeness holds true in almost everything we do. Unless you’re a risk-seeking daredevil, the less you know about a new situation, the more cautious your approach to it. Whether it be buying a new car, starting a new job, or moving to a new neighborhood, discretion remains the better part of valor.
This is especially true for retirement. As a result, new retirees exhibit an often irrational behavior to avoid spending (see “Why Are We Seeing More Cases of ‘Fear of Spending’ Among Retirees?” FiduciaryNews.com, December 10, 2019).
Can you blame them? They live their whole life being taught to save and be frugal, then – WHAM! – they retire and are forced to do a 180 on the whole saving thing. Ouch! It’s enough to make your head spin.
Or at least it’s enough to lead you to live well below your means.
While there’s not really a financial problem with that, there could be a quality of life problem with it. And a poor quality of life can lead to other issues that supersede finances.
We all desire a comfortable retirement blessed with the carefree ability to do what we want, see what we want, and be with who we want. If you’ve set artificial constraints on what you can do, you’ll find retirement becomes disappointing or worse – anxiety inducing.
It’s difficult to fully prepare for leaving the nest of 9-to-5 workday for the nest egg you’ve saved all your life. In fact, it’s similar to the situation new hires face when it comes to learning to save into that nest egg.
What’s the similarity between both circumstances? It’s a lack of familiarity, the tepidness that comes with stepping foot into the unknown for the very first time.
Plan sponsors have addressed that issue for new hires by developing what can be a fairly comprehensive onboarding program for new hires. These sessions quickly bring new employees up to speed about everything from benefits to company policies to the best parking spaces. Such training is now the standard, no matter how big or small the firm.
But what about the other end of the career path? When employees near retirement, the training tends to be superficial. Sure, it deals with common financial planning strategies and tactics, but, remember, the fear-of-spending malady emphasizes “fear” more than “spending.” This is not a fiscal matter. It is a mental matter.
What’s needed, then, is a thorough “unboarding” program for the end of one’s career that complements the onboarding program experienced at the beginning of one’s career.
In addition to the usual budgeting, goal-setting, and withdrawal logistics, an “unboarding” program should also deal with the psychological elements of retirement. These might include:
- recognizing the social aspect of fulltime work and identifying suitable replacement substitutes;
- determining your broader purpose of life so you grasp that you are living for something;
- and, last but not least, undergoing a process that allows you to accept that you are no longer in a savings mode, but in a spending mode.
Done correctly, retirees will comfortably wade into their retirement.
And what is more relaxing than easing into the warm waters of late-life leisure?
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