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  • Writer's pictureBridget Sullivan Mermel CFP(R) CPA

Emotional Hurdles of Retirement: Two Surprising Challenges

Two Emotional Hurdles of Retirement: Retirement is great, but can feel a lot different than you expect, especially at first. We see that retirement presents some significant challenges.

In this episode, we’ll be teaching you about what Wall Street advisors don’t tell clients about retiring, the two biggest challenges we see, and give you tools to work with these hurdles so that you can feel happy and free in retirement.

We talk about retiring at 40 or 50 as well as at 70. We also talk about bag lady syndrome and how you might process those types of fears.

You're prepared financially for retirement, it makes sense to think about the other factors in retirement so you can feel great find a lot of meaning after working is done.

00:00 Welcome!

01:17 Challenge 1

07:32 Challenge 2

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John: Retiring is great, but it can present some significant challenges. In today's episode, we're going to teach you what Wall Street advisors don't tell clients about retiring and the two biggest challenges that we see, and also give you the tools to be able to tackle those challenges. Hi, I'm John Scherer, and I run a fee-only financial planning practice in Middleton, Wisconsin.

Bridget: And I'm Bridget Sullivan Mermel. And I've got a fee-only financial planning practice in Chicago, Illinois. Before we start, let's remind everyone to subscribe. It helps our credibility with YouTube and helps us reach more people, so we really appreciate all our subscribers.

John: That's right. Now let's talk about retiring. This is one of those things that's so counterintuitive to me, and I've been doing this professionally for over 20 years. We all strive to get to retirement. That's the American Dream, and it can be really challenging when you get there, and it can be a big mind shift with things. And so, we're going to talk today and maybe equip you with some information. Being aware of these challenges, I think, is the first thing.

And then the second thing is how do we address that awareness and give you some tools to think about this. And the first one that I want to make sure we talk about is that going into retirement, you work for your career, you save money, but after retirement you're in a position to be financially independent. You have to hit the dream. And then making that transition from being a saver to a spender is a really big change of mindset and leap of faith. I think you may see that with some of your clients, and we just had it come up a couple of times here, and it's sort of on the forefront of my mind. Do you see that with your clients as well?

Bridget: Totally. And it depends on what year they retire, so people who retire when they're 45, 50, if they're fortunate enough to be able to do that, I see it as an even bigger issue. People who are 70 when they retire because they can conceive of their lifetime, their time frame, like 25 years, they can think, “I know what that is.”

John: Right.

Bridget: When you're 50, it's a little harder because you can think, “Oh my gosh, another 50 years.” And so, it can be harder to start spending.

John: Like you said, it's a leap of faith to do it. And it's interesting because it seems like what we're going to be talking about in this episode is really the emotions behind some of these issues. What are the emotions behind it and how is that playing out? And so, it is a huge factor because there's fear in thinking, “I don't want to run out of money,” so you got to remember that it’s going to be okay. And there're things that we do as financial planners to help people with that.

John: Right.

Bridget: You can design your portfolio to help people with that. And I'm going to tell you that our answer is generally not to buy life insurance, but there are other ways you can do it. There are ways that you can work on your portfolio to design it so that you should not run out of money.

John: I just wanted to pull out one of the things that you said there just in talking about, “I just want to make sure that I never run out of money,” and that fear of things. And it's this financial thinking saying, “Hey, we can design the portfolio,” and of course that's important. I don't want to say that that's not important, but it's the feelings that are the real challenge. You can design a portfolio so that there's enough money, and it's important to do that.

But from my experience, this has very little to do with do you have enough money? I mean, we work with folks who objectively have plenty of money, but it's the mental challenge of saying, “Hey, I've worked for my lifetime.” And one of the reasons why those folks have all the money they need is because they have permanent savings, they don't spend, they're putting money in their 401Ks, they're maxing out their Roth IRAs, and they're doing these things, and they're not spending more than they make.

And think about what happens with this—and I think you're exactly right, Bridget, I hadn't considered the people when you retire at 70 versus 58 is a much different thing—now I'm going to retire, and I am never going to earn another dollar by my labor. For my lifetime, I've been able to support myself, because I go to work and I do my thing, and now for the rest of my life, I'm going to live on this money.

And we had a client, and he was a friend of mine, too; we've known each other for a long time, and I said this, and he said, “Jeez, I know I've got enough.” He has a pension and all these sorts of things. Yet, he said, “I know I got enough. I'm just nervous.” And I said, “Well, yeah, you're never going to make another dollar the rest of your life. And he looked at me and he said, “Oh, naughty word.” That's exactly it.

Bridget: Right.

John: And I said, “You should be scared, you should be freaked out; it's a big thing.” And this is the thing that, to me, doesn't come out in asking, “What's your number for retirement?” And the traditional Wall Street saying, “Here’s how we make enough money, so you have enough to retire.” It's this emotional side of going, “Yeah, this is what we're preparing for, folks: making the leap to go from earning to spending.”

You're not going to earn and of course, your logical brain objects, but you save, so you can spend this money. Yes. This is a plan. And then when you have to do it, you go, “Whoa, it's a big deal.” And so, I think some of this is just being aware. This is what you're coming up on. And not being surprised by it helps when you get there to go, “Oh, yeah, that's right. I'm all churned up inside. This is what I was expecting.” If you know that you're going to get all churned up, it makes it easier. When you're surprised by it, it can be really challenging.

Bridget: Yeah. I really like what you said, but another topic I want to bring up is the focus on identity. Your basic feeling of identity can depend on money. It can actually feel pretty good to have a big nest egg; you feel like you've accomplished something. For example, I've been working for this my whole life, and look it, I got enough money to retire. This was my goal. I feel good. I got it. Now I can retire. But then you think, “Wait a minute, if I spend it, it's not going to be there.”

John: Right.

Bridget: And some part of my identity and feeling of pride in who I am is that I've been able to do this and it's building. Not it's diminishing. It seems like some people can feel like they're diminishing because their money is diminishing.

John: Yes. When you brought up identity, I had a little different view. That's a really great point. We set these goals because we're trying to accomplish them, and I thought you were going to go in the direction of work for many people is identity. When you go to a cocktail party, what do you ask people? What do you do, right? And now you don't do that anymore. That can be a really challenging thing.

Bridget: Right.

John: And I think it's a great segue. And one of the second main points is asking, “What do you do?” Not so much from a job standpoint, but now in retirement, what do you do? That use of time can be so cool. We've got all these freedoms of things, but that can be a real challenge when you've got that whatever your work schedule is nine to five, Monday through Friday, or you've got a routine, and now suddenly you don't have that routine, which can be a huge challenge.

And you hear about people going back to work in retirement sometimes because they need money, but just as many times because they don't have anything else going on. That routine can be really challenging, and especially recently with COVID and things going on. So it's one of the things to think about. I know you deal with that with folks, too, and there's exercises and things to go through, but what do we actually do in retirement? It's cool, but it can be challenging.

Bridget: Right. We have another episode in which we also talked about this. There's another emotion that I want to bring up. And sometimes if you're in a couple, people have different emotions.

John: Really? 😊

Bridget: But another motion that some people have is fear of losing it all. And in the business, and I think colloquially it's called bag lady syndrome. Feeling like you’re going to completely run out of money and be destitute. That can keep people up at night, and that can make it very difficult for people. And sometimes people in a couple feel different ways. And I think to some degree really knowing the facts can help.

But I think even more than that is figuring out what those underlying fears are, maybe writing about it or talking to somebody else about it. So sometimes it can be something like, “I'm abandoned in a shopping mall. I don't want to be there again. I'm totally by myself and, oh my gosh, what am I going to do? Nobody's here to take care of me. I'm totally lost. I have fears of abandonment by everyone who loves me.” It can be a really deep fear.

John: Yeah, it is. And I just smile because for some of those things I love that you said, “Identify what's really going on. What's causing these feelings?” The feelings are real, but then what's going on? And then so many times in my life anyway, when I look at that and say, “Okay, not everybody's going to abandon me,” but the feeling is still strong. And just be able to go, “Oh, let's look under the hood. What's going on?” And when I can do that, it really helps, and we can help clients do something similar by asking, “What's really going on here?” They might say that it's about running out of money. What does that mean? Ok, it's not running out of money, it’s about being abandoned.

All these things factor into feelings. You kind of spiral down, and there's a word for it that's escaping me right now, but it’s responding to the question, “What's the worst that can happen?” with extremes, like saying, “My friends are going to leave me. I'm going to live on the corner. Nobody's ever going to talk to me.” And then you go, “Okay, good. I got that out.” And then you can sort of clear up the baggage that hangs in there for you. And by talking, by journaling, by identifying what's going on, it seems like that's not a very financial planny thing to do, but it works.

Bridget: I have to say that at one point in my life, I sat on a park bench for a while. I was in a situation where we had to take our laundry over to the laundromat. I was in an apartment. It was three or four blocks away, so I found a shopping cart, and I put all my stuff in a shopping cart, and I really didn't have that much stuff at the time.

And I was thinking, “Wow, this is ringing true for me.” And so, I just sat there for a while, and honestly, it wasn't that bad. I thought to myself, “There're passersby. It’s kind of a nice day.” I wrote about it to one of my friends, and she's reminded me about it since. So I would say that if that's a fear, get to the bottom of it, but spend some more time in nature. Go outside. Sit on a bench. Confront it a little bit.

John: Confront it. That's a great term for it. So many of our things are the fight or flight thing. I feel like a lot of this is flight. And to have some of that fight is necessary. To sit with it and ask, “What's the worst that could happen?” It’s kind of a funny phrase, but what's the worst that could happen? is a good start, then dig into that.

Bridget: I'm not saying this to minimize the difficulty of people who are abandoned and who are homeless et cetera, but I'm talking to people who just have this fear and encouraging them to confront it. I don't want to seem uncompassionate, but I just want to encourage people to confront it.

John: Yeah, that's great. I guess maybe a great place to sort of circle back on things and wrap up. Again, we're talking about the challenges in retirement that nobody else talks about in the financial world and thinking about what it's like to transition from being a saver to a spender. We gave some things to consider how they might make you feel and what you can do about it. And then how are you going to spend your days? It’s great for two weeks, but on the 732nd day in a row where you have nothing to do, how do you think about that? If you can do those things, that's going to put you way ahead. And with that I'm John Scherer. I run a fee-only financial planning practice in Middleton, Wisconsin.

Bridget: I'm Bridget Sullivan Mermel, and I've got a fee-only financial planning practice in Chicago, Illinois. Please subscribe. We're also both members of ACP or the Alliance of Comprehensive Planners. We both talk to new clients all the time. And if you are interested in finding financial planner but you're not in our area, check out and there you'll find other likeminded, financial planners. And with that, thanks, John.

John: Thanks, Bridget.

At Sullivan Mermel, Inc., we are fee-only financial planners located in Chicago, Illinois serving clients in Chicago and throughout the nation. We meet both in-person in our Chicago office and virtually through video conferencing and secure file transfer.

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