Ep # 59: More Than Just Finances: Other Surprising Results From The 4 Pillars Of Retirement Study by Edward Jones

Benjamin Haas |

Full study here:  https://www.edwardjones.com/sites/default/files/acquiadam/2021-06/Four-Pillars-US-Report-June-2021.pdf



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Benjamin Haas  00:03
Hi everyone and welcome to A/B Conversations where we will help you CFP your way out of it. A podcast where you get into the minds of a couple Certified Financial Planners on how we think and feel about everyday financial planning questions and what should really matter most to you.  A healthier financial life starts...now!  Hey, Adam. Welcome back to podcast time. 

Adam Werner  00:31
Great to be here. 

Benjamin Haas  00:31
Good for you. Yeah, we make a little turkey chili afterwards. So hopefully, that gets everyone nice and hungry for the podcast today, so no good segue for this one. This is going to be a little bit of a different attempt for us because we're going to go through it's called the four pillars of retirement, maybe this is really good to just right off the bat say whether you're retired or starting to think about it. What we've certainly recognized not just post COVID world but trends that have been kind of moving this direction, the thought and feelings around retirement and what the focuses are, it's starting to shift. I think it's really an interesting kind of conversation to have on not only what are those statistics and what are we learning about what's best for clients? But you know, get people really starting to think about that, if they haven't really considered what retirement’s going to mean to them.  So, quick question. Best leftover part of the thanksgiving meal. What's the best re-heat? 

Adam Werner  00:42
So this was in the upcoming newsletter or maybe this will be in conjunction with the newsletter. 1,000% it's the leftover turkey sandwich. Some bread, some mayonnaise, some turkey, side of chips. I'm already looking forward to it. So, yeah, we've talked about it in different podcasts to certain degrees but this one will be focused on those four pillars that you've had and we'll talk about them in a second. But essentially, Edward Jones, the investment company, along with I don't even know the names of it but essentially other different survey companies.

Benjamin Haas  02:22
Age wave. 

Adam Werner  02:23
Yeah, yeah. Okay, age wave and Harris Poll, essentially surveyed a bunch of Americans and Canadians 18 and over with a focus on the retirement side of things. So that's where a lot of these statistics come from but they put it in one nice package that truly is looking at those four pillars. Historically, when people thought about retirement, it was financial. Right? When can I financially actually get away from work? And I think that was more so kind of the approach, right? It was, we've talked about this before to retiring away from work and then I'll figure out what the heck to do with all my time, rather than we are certainly strong proponents of, you have to have some sort of strong purpose to make that out to fill that time, give satisfaction, all of the other things that come with later in life. The finances are certainly a portion of that but that is not the most important at least what we understand and this survey results kind of prove. 

Benjamin Haas  03:31
Yeah, people want to be more active. They're calling this a new chapter in life. It's not just time to rest and relax so let's go through them. Finances is one pillar and we probably won't even start there because I think some of that is just things that we would normally talk about in another podcast. It's health, it’s family, it’s purpose, and finances but let's talk about it through that lens of this is a journey. Retirement is a journey. It's not necessarily a destination so right, I kind of wanted to go through things that I read within this report that gave me pause or really kind of shocked me. Let's maybe start with health. It is, we have articulated this before, it's the number one thing that retirees, pre-retirees are concerned about. Yeah, far more than money. 

Adam Werner  04:31
Yeah, so the statistic was 96% of retirees say that health is more important than wealth in retirement. Which is again, it's crazy to think about that. 

Benjamin Haas  04:50
Nearly 100% of people within the margin of error. 

Adam Werner  04:55
Yeah, basically health is more important than wealth. 

Benjamin Haas  04:59
And if you think about it, what good is all that wealth if you don't have your health to enjoy it and do the things that would bring you enjoyment and purpose and spending time with family? And it's kind of this perspective to and we do see this as advisors that you do all this planning to say, okay, between 65 and 85-95, how much money do you need to live off of? That used to be the one thing? All our plans are kind of dedicated to you finding that one number, but yeah, there's a difference between your lifespan and your health span. Those first couple years of retirement where hopefully, you do have good health and can enjoy some of that before some of the things that just wear down, chronic conditions become a thing and your quality of life does start to deteriorate? 

Adam Werner  05:50
Yeah, and so I had this awful scenario in my head. God forbid, you retire, you're enjoying retirement and then some health diagnosis really cuts life short to some degree. In that, you've done all this work, you've saved all this money, live responsibly and something you cannot control to a certain degree is that health side of things, so all of the money in the world doesn't necessarily solve a health issue. So yeah, that being one of the biggest concerns and worries makes sense to me and I think the world and our country in general are understanding that priority of health is kind of number one. 

Benjamin Haas  06:38
Yeah, 80. I'm trying to remember specifics of the statistics. 80% of people over the age of 65 have one, at least one chronic condition. So again, I think it is a little bit of that quality of life. It's putting some emphasis on that but even as planners, it's for us to then maybe try to hear how people think and feel about this in a way that doesn't just create the straight-line projections of well, you can afford this or you can’t afford to do this. It's how do you really envision that journey of yours in retirement and maybe it is a little more spending on the front end because you do value that time when health maybe feels a little bit better. They talk about mental health of course in there too and I found it especially coming off of COVID really interesting that the number one concern with health in retirees it's now Alzheimer's. It's dementia. It's not COVID-19. It's not strokes and cancer, it's the deterioration of the mind. 

Adam Werner  07:44
Yeah, that one I had noted, too. It's the mental health, it's Alzheimer's and dementia, those things that you mentioned outranked cancer, heart attack, stroke, in terms of concern. Which I guess, to a certain degree does make sense to me. I don't know if that's necessarily true but certainly a heart attack and a stroke and maybe even cancer can kind of just hit you like that and it may just pull the plug on you. Dementia and we know Alzheimer's, like that can be a very long runway. We've been dealing with it tangentially through certain clients and their relationships and it's certainly not a pleasant experience. I think as more and more people experience that themselves, they certainly don't want to fall into that camp. It's just an awful, awful situation. 

Benjamin Haas  08:39
Yeah, and we do recognize in our profession that these things are intertwined, right, we do need to prepare financially for like you say, these are the conditions that will require some sort of care and maybe for longer periods of time that really should be prepared for. So there's a little bit of a difference between mental health, where that's going to be completely interconnected to family and purpose and other things we'll talk about in a second. But then there is the failing faculties that you really do need to think about how that can be prepared for and of course, I'm no doctor but there are things that you can do earlier in life. Keep your mind moving. That is right and that can happen. I saw the stat in here and I was a little surprised especially coming off of a pandemic, you know, two thirds of baby boomers say that their mental health is very good to excellent. So even though it's a major concern, like the number one concern, two thirds are still saying, I'm in a really good spot with this.

Adam Werner  09:45
Yeah, I remember seeing that too and I didn't I don't know that I noted that specifically but essentially the point was, as people age and theoretically responsibilities of children, mortgage work, those things start to lessen, that does actually increase feelings of contentment and happiness, that side of things. So I thought that was very interesting to me and I mean, I certainly in my world, right, parents, in-laws, I certainly see once they've kind of flipped that switch to retirement, it's definitely true. 

Benjamin Haas  10:30
Well, and let's be honest, our parents, our grandparents, the generations before us, right, they have life experience, they have gone through things, they have more emotional maturity, perspective, coping mechanisms. So, it does stand to reason that the things that would put them maybe in a worse spot mentally, how they're emotionally dealing with something is going to be less of a stressor than maybe it is for us and raising three kids right now. 

Adam Werner  11:01

Benjamin Haas  11:02
This podcast is not about me so let's move on. 

Adam Werner  11:04
So I'll stick on that health point real quick and how it ties into the finances. As part of that, the biggest concern being health. The other big component of that is, if I am not healthy, how am I going to cover that financially, right, preparing for increased healthcare costs. Preparing for potentially paying for long term care and that is where we kind of see and part of the report shows is that, obviously, if you do have your ducks in a row from a financial standpoint or you have bucketed money for those specific purposes accumulating wealth by itself, really is not necessarily the goal, it really does give that confidence that if I have my proper resources, its security, to take care of whatever those unexpected events are. I'm not going to be destitute if something happens and it really is just the freedom to do what they want, when they want and I think that's going back to that earlier point on just as people retire, having more happiness, more contentment, yeah, just that side of it, the mental side of it. That does Jive there, right. Just being able, I know in talking to my dad, like, just waking up every day and not necessarily feeling overwhelmed by anything. I can do whatever I want today is like, completely freeing. 

Benjamin Haas  11:09
And as much as that is the catalyst that does, this is a good segue into kind of thinking about okay, but then what does fill that time? And it's still these are trends that have existed, it is all about family, friends, and finding that purpose and maybe that's the shift. I know, we've talked about before the shift of what about the job? Do I really need to replace in my life? But it really is retiring to something and not just away from that specific work. So, I don't know, let's maybe talk about second pillar, you know, family first. 

Adam Werner  13:16

Benjamin Haas  13:17
I found it really, really jarring is maybe not the word I should be going with, but jarring to see that passing on memories and values and life lessons was overwhelming, like 75% of the goal compared to 25% leaving money. 

Adam Werner  13:39
Yeah, so I have that one noted, it's all throughout the numbers, it was 75% of the retirees surveyed in this process and 83% of the younger adults, so pre-retirees and all the way down to age 18 agreed that the most important thing to pass on were those memories, life values, and lessons in life in general. Rather than money, real estate property, things like that, was an overwhelming agreement on both generations that it's the time and the memories more so than passing a financial account when you die. 

Benjamin Haas  14:17
Because this is where I kind of have to step out of financial planner world and think like an individual too, you know, in planner world, we're so conscious of you need to have $1 left on the day that you pass away. We talked about 4% rule and withdrawals and you know, what can you afford to do. When really we are seeing this I think when we talk to our clients on what matters most to them, it is these experiences. It's being able to either provide them or participate in them. So it goes against the grain a little bit of you know, even our little Pennsylvania Dutch mentality of you save, you save, you save but the statistics, it's overwhelming. It's creating those memories and finances play a role in that.

Adam Werner  15:02
Yeah, so that's exactly where my mind went that it is and we've experienced this with clients, it is very difficult and maybe slightly unnatural when they get to retirement or are contemplating - is now the time to finally step away. Being able to flip that switch from I've been saving all my life for this moment. Now being able to pull money from their savings just feels very odd and just not uncomfortable, I think for the majority of people. But I think it is just a general mindset of this nest egg, whatever that needs to be. The purpose that it can serve to allow those experiences. You're using what you've saved to now put into action, like you said, it's the time with family vacations, the purpose, whatever that may be. It is just slightly flipping the mindset to now I've saved this money. Now I'm going to turn it into the more. I don't, I'm not coming up with the word but it's not the financial impact. It truly is the mental and emotional and like that kind of connection. 

Benjamin Haas  16:19
There is another stat in here when he was talking about what is creating that sense of fulfillment for people and the number one again, overwhelming is spending time with loved ones, whether that's defined his family or not and I think you're spot on. When we think about what we most often hear from clients in retirement, what are your goals? What do you want to see? What do you want to have happen? It's always, you know, just spending time. If it's family and grandkids if that's their situation or if it's the ability to do some things with friends and travel. Money certainly plays a huge role in that but you know, it does come back to, we need to prepare for that. But we do need to have this balance between what can I afford to do, at what frequency and make sure that, hey, this other thing that we were just talking about health later in life and maybe needing money, that we've balanced that all out. And that's why this is an art, it's not a science and everyone's situation is a little different but these definitely are interwoven things that we need to have conversations on with people. But yeah, family, it's a pillar. Huge. 

Adam Werner  17:28
Yeah, the one thing that I noticed just about purpose in general was that there's a strong sense of purpose for retirees when it comes to spending time with loved ones, family, friends, whatever that may be and then not only is that help fill some of that purpose, it really does intertwine with the health that is proven that they are happy, healthier, and live longer when these retirees have a sense of purpose in their lives. So it's where these different pillars start to meet. Where you can't just focus on one, I guess is the point. 

Benjamin Haas  18:07
Yeah, I took away from there definitely are these phases of retirement where, you know, you kind of have this honeymoon phase after you retire, where most people can kind of script their first 100 days. Yeah, maybe like your dad or not setting the alarm clock, I got the honey to do list but that is going to shift as health changes or as relationships change, as family dynamics change. Yeah, it was crazy to me that to then see that stat, you know, connections and preparing sometimes for that solo journey, where there is maybe more of a sense of isolation, you know, 44% of women over the age of 75 live alone. It's statistically shown that men pass away first. That was just a really big number to me and it just proved even more that creating those connections and having that sense of family, again, loosely defining family, friends, loved ones. It's just really important to those other pillars of continuing to feel like you have purpose and mental health and being supported if your health is starting to decline. 

Adam Werner  19:17
So even a slight variation of that note, right, your point on isolation and 44% of women are going to go through that solo journey. One of the other thoughts or one of the other things that they talked about was, as people retire, 41% of those people that are retiring, one of the things that like there. I'm trying to find it here, essentially what people said they would miss the most after retiring from the job, are the people and the social connections. 

Benjamin Haas  19:49
We hear that a lot. 

Adam Werner  19:50
Yeah, being able to either continue that or replicate it in some way, shape, or form with other people that are not just family. That are friends and past co-workers and different groups. I met with a client a few weeks ago that for the first time in her life started playing pickleball and now this is a whole new community that has opened up to her to meet with different people that you never would have experienced in a previous situation. 

Benjamin Haas  20:21
And I don't know the stats, pre COVID shutdowns but I thought it was really interesting to see the percentage, how high the percentages are on again, retirees using technology. Technology being defined as using the internet, being on social media. Something like 70% of retirees have smartphones. What was that number five years ago? It really does, hopefully allow for some more connection and interconnectedness at a phase of life where it's really, really important. 

Adam Werner  20:57
On the purpose note, one of the things that stood out to me and it makes complete sense. That deriving purpose in different ways, one of them was giving, right, not just not just financially but actually being a part giving back to the community in some way, shape, or form and it was nearly 90% of the people surveyed here. And again, this isn't just retirees, there are some younger people in this group, think there should be more ways for retirees to essentially interact and give back to the community through their experience. 

Benjamin Haas  21:31
With their experience, with their time, with their talents, not just money and I think we're seeing that too. It is a much more active, the baby boomer generation. We're like halfway through, I think that was in this report to half of the baby boomers have now retired. It is a far more active group that's willing to try new things. That still sets personal goals. They're deepening spirituality and sense of self and that's why it's really cool to call it a journey, not a destination because to your point, whether it's giving, whether it's trying to grow themselves, it really just is this new chapter of life. That's cool from our standpoint to watch people go through those developments but to tie it back to our job, it just makes it really important to not just get too comfortable with the assumptions you made on day one of retirement. What's important to you, how you're going to spend your time and therefore your money. We see it shift pretty dramatically for people. 

Adam Werner  22:33
So that's a great point. I'm glad you said that because it truly does make our job ever changing to the point where I mean, we've said it before, right? When we create a quote unquote, financial plan, the actual document that is documenting advice, the minute you're done with that word document, it's out of date. At some point, something's going to change, focus is going to change, whatever. But yeah, there's a great point that as people's focus and hobbies, whatever that sense of purpose is shifted and adapted over time, that's going to have potential dominoes to the financial side that we would hope to help with.

Benjamin Haas  23:20
Which is the fourth pillar: finances. And I think, you know, what was in this report really just reiterates a lot of the things that we already know to be true but it is very common for somebody to come to us as they start to think about retirement and they asked that question, do I have enough? Am I going to have enough that I'm not running out of money on the back end and even that, enough is so very relative. Again, it's not just this financial stuff, it is starting to pull in, we have conversations on health and long-term care, and what that's going to cost and all those things but it is trying to determine for them well, what is enough for you and how do you define that when it comes to friends and family and purpose and hobbies and things of that nature.

Adam Werner  24:05
The note that I made was three quarters of those people planning to retire haven't even considered or calculated how much thinking they'll need in retirement, which is crazy. But again, it makes complete sense.

Benjamin Haas  24:19
It's so natural. Yeah. 

Adam Werner  24:22
So we certainly see this right. Even if people come to us and have a general idea of what they think they're going to need. There are many different variables that are just not part of like the general thought of, well, hey, I'm going to retire and here's what I think I need because this is what I'm spending now. Like you said, it's factoring in health care costs and Medicare and long-term care in the future and whatever else. So yeah, even the fact that majority of people haven't even really considered what do I actually need to retire? Is quite astounding.

Benjamin Haas  24:59
I guess my response is, that's okay. 

Adam Werner  25:02
Oh, yes. 

Benjamin Haas  25:06
To the to the people listening that are going, hey, you know, this all sounds overwhelming or there's just so many things to think about. We hear sometimes as well, I don't even know what questions to ask. Yeah, it's okay. I just think this four-pillar idea really resonated with you and I because they are the things that we talk about and sometimes people may have that misconception that I'm not going to go to a financial planner because I don't know the financial questions to ask. Yeah, look, it's very true that when someone comes in and they want to start talking about retirement, finances are the last thing that we are going to start the conversation with because it is these other things of family and purpose and perspective with health that really are going to drive our process. So point is, just start. Just get the conversation started. 

Adam Werner  26:01
There's a saying that is just generally what's gotten me here isn't necessarily what's going to get me there. Whatever that there is and one of those shifts for people I think, is just leading up to retirement not we have acknowledged with almost everybody we've talked to; saving is one of the hardest parts of getting to retirement. Having those habits, setting aside money, that is difficult but now flipping that once you retire and that those paychecks stop coming in and that saving is either gone, like you stopped the saving process. Now that shift to when I have to conserve and manage these withdrawals moving forward, the majority of people again surveyed here, said that is even more confusing and challenging because it's just a new environment, once again. 

Benjamin Haas  26:58
Well, and it's shifting, I think that was kind of the point of this whole report. It's that some of these things, how people are viewing retirement, what's most important to them, it's why we need to continue to evolve and the way that we go about our process but the point is understanding how people are thinking about it is only going to help us serve people better. More and more serving them is not just going to be the pie chart. It is having those meaningful conversations; we call that the human side of advising that's really going to help them with the important stuff and this report really showed what that was and how much money they have is very, very low on the list because it's relative to everything else that really doesn't matter. 

Adam Werner  27:45
And our hope for us and our clients moving forward is to truly start to align these four pillars, so that they truly are helping each other. Your finances are leading to your health, which is leading to your purpose, and then that comes from family or whatever that may be. But essentially, yeah, let's start to put these puzzle pieces together in a way that fits and gives people greater sense of purpose and accomplishment and just confidence that this transition into and through retirement is not necessarily a scary one.

Benjamin Haas  28:22
I think that's a perfect way to wrap it up. Thank you for putting it that way. 

Adam Werner  28:26

Benjamin Haas  28:28
All right. Enjoy those turkey sandwiches. Have a wonderful holiday. I'll catch you on the other side of it. 

Adam Werner  28:37
Sounds great. Happy Thanksgiving everybody. 

Benjamin Haas  28:46
Hey everyone, Adam and I really appreciate you tuning in. Please note that the opinions we voiced in the show are for general information only and are not intended to provide specific recommendations for any individual to determine which strategies or investments may be most appropriate for you. Consult with your attorney, your accountant and financial advisor or tax advisers prior to making any decisions or investing. Thanks for listening!

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