Whether it’s a change in job situation, the death of a spouse, or the need to help a family member, in times of need we are one of the first people our clients call. In those times, more than ever, I feel like I am making a huge impact on their lives.
As an advisor, my job is to build plans to help people achieve their retirement dreams. An essential part of planning to achieve those dreams is acknowledging curve balls will show up. We may not know when, we may not know in what form, but they will, and when they do it is helpful to have a level headed advisor in your life to see you through the storm and come out the other side unscathed. Here are several of those curve balls that I frequently see as an advisor:
Change in Job Situation
Job changes in the years leading up to retirement are more common than most people think. They could be voluntary or involuntary, but more often than not, they are the latter. The vast majority of people leave the workforce earlier than they intended to, and for reasons beyond their control.
When a change in job situation occurs, people immediately want to know the impact it will have on their financial well-being. Am I going to be able to retire when I wanted? Will I still be able to live the same lifestyle I expected? Do I have options for getting a new job? Do I need a full-time job or can I transition to part time work?
An advisor can answer a lot of these questions with quick adjustments to a financial plan. Perhaps the person will be able to retire on time and how he or she wanted and didn’t need to be worried in the first place. Maybe the job change will require an adjustment to his or her expectations; a financial plan will remove the uncertainty as to how much. Perhaps he or she can accept a little less pay, or transition to part-time by working one year longer than originally intended. Maybe he or she could retire right now, just with slightly lower spending. In times of uncertainty, it helps to have a clear picture of what your options are.
Death of a Spouse
A surviving spouse has a lot to deal with when their significant other passes. It’s clearly an emotionally exhausting experience and the last thing they want to deal with is their finances or retirement plan. But the financial impact the death of a spouse has through changes in income streams (like a spouse’s pension or social security) and a new tax situation need to be adjusted for in future spending.
When a spouse passes, the surviving spouse often cuts spending arbitrarily, and usually by a lot more than they need to! This is where a good financial advisor can really serve as a helping hand. By adjusting a financial plan, they can show the financial impact the passing of a loved one will have on the lifestyle of the surviving spouse. Most of the time, it is much better than the surviving spouse had expected.
This helps them get a better feeling of security during an insecure time, while also giving them permission to spend money and time on things that are important to them in life, such as family and friends. Times like the death of a spouse are not times to skimp on the things and experiences that make you happy in life, as long as you can afford them. The key is having the discussion to see what is possible. Everyone has to start somewhere.
The Need to Help a Family Member
Whether it be a divorce, medical issue, or another one of the millions of reasons that could cause a person to need some assistance, our clients commonly call us wondering what options they have to help a family member.
There are few financial decisions more strongly influenced by emotion than the decision to help out a family member. It is extremely important to remember that you can only help people to the extent it does not harm your ability to support yourself. Sometimes my job as an advisor is to remind people that, “you have to secure your own mask before assisting others”, to use an air travel example.
More often than not, however, we find ourselves telling clients they do have the ability to help their family member without impacting their own retirement plans and financial well-being. These are some of the more rewarding days in the office. I see in an instant, the emotional weight of a family crisis fall from people’s shoulders. Tears are common.
In these cases, we can give a clear picture of how much help they can provide. Should the support be in the form of a lump sum or ongoing financial support? How is the client best to provide the support in a way that minimizes the chance that their emotions get the better of them and they get taken advantage of? Can it be done in a way that preserves the dignity and self-esteem of the family member who needs the support? These are all questions that are best answered by an objective advisor who will not be so influenced by the emotions of the situation.
The Importance of a Level Head in Times of Crisis
There’s something inherently valuable in having a level head to talk to during stressful life events. It is one thing to react rationally when everything is going well and we can manage our emotions successfully. But we all know when an unexpected, highly emotional event enters your world, it changes things. As Mike Tyson said, “everyone has a plan… until they get hit.”
Emotions and stress can make the most rational person do irrational things. This is why we as advisors are here to listen, hash out how you feel, and figure out what it takes for you to come up with a plausible solution to your problem. It is important to find a solution that not only makes you feel better but preserves your financial well-being.
Making an emotional choice in a time of crisis can have a significant long-term effect on your financial security. So as you approach retirement you must ask yourself, “Can I manage my retirement plan and address the emotional and stressful events as they come my way?” If yes, then give yourself a pat on the back, because you are one of the few. If not, then it’s time to start thinking about consulting a financial advisor. That way when life inevitably throws you a curve ball, you will have an objective coach in your corner guiding your decisions and looking out for what is best for you.