Too often, employees approaching retirement tend to romanticize the coming freedom—or dread the boredom that awaits.
While group retirement savings plans go a long way to give financial peace of mind, plan sponsors can provide even more value by helping employees psychologically prepare for retirement, emphasized Tammy Vigue, a Vancouver-based retirement coach and consultant, during a recent podcast for Benefits Alliance Voice.
Well before retirement, it can be invaluable for employees to think ahead about their lifestyle, health and the quality of personal relationships upon retirement. The goal is to replace the meaning, identity and drive once derived from the workplace, said Vigue.
Employers can integrate these non-financial aspects of retirement when educating employees about retirement planning. Group discussions can explore meaningful post-retirement activities, such as philanthropy, volunteering, working part time or even fulfilling a dream to start a business.
During the podcast, entitled “Planning Psychologically for Retirement”, Vigue emphasized the importance of fostering a dialogue that draws out the employee’s “vision of their future self.” Employers can support this by offering workshops and inviting retired employees to share their experiences. Such supports also help employees engage more with financial planning and group retirement savings programs, since they’ll want to ensure they have the finances to achieve their vision.
Three pillars of retirement
Successful retirement is comprised of three main components, summarized Vigue:
- Financial. Plan members need to put in place the funding to enable their envisioned retirement life.
- Health. Personal health or the health of a loved one may require retirement sooner than later, which may lead to adjustments in financial planning and lifestyle goals.
- Psychological. How do employees truly feel about retirement? Do they have misgivings or misconceptions? “There’s a huge opportunity for advisors and consultants to really make an impact and also differentiate themselves in this space, because it’s still a bit of a missing element in terms of retirement preparedness,” said Vigue.
To that end, workshops with retirement coaches and retired employees generate open dialogues in a stress-free, empowering manner. Employees have a safe space to bring forward and address the emotions associated with retirement—including anxiety and fear of the unknown.
“I think it’s really about opening up the conversation, because for employees it is often the first time they’ve ever heard that there is more to retirement planning than just savings,” stated Vigue.
She added that plan sponsors should encourage plan members not to wait until they’re just a few years from retirement to have these conversations. A much earlier start gives them a longer horizon for mapping out their optimal retirement.
“It’s about creating a vivid picture of who you are in that next phase of life,” said Vigue. She added that research shows that if a person can vividly picture themselves in the future, mapping out exactly what brings them meaning and purpose, it can positively impact their behavior in the present, helping to adopt good savings and lifestyle habits.
“We’re making sure that we’re taking care of ourselves today, so that the possibility of becoming that future version is much more likely,” said Vigue.