Participant engagement Ready, Set, Retire. How advisors can help participants prepare for life after work

We have long treated retirement as an event, a moment in time when we more or less abruptly shed our work attire and commute, accepted the proverbial gold watch and headed for the rocking chair. That may have been the image presented in generations of retirement education brochures, but it isn’t— and perhaps, for most people, never was — the reality of retirement. Retirement is a journey, not an event, and with any luck, it will be a long one. Like any cross-country road trip, retirement requires some important decisions before heading out the door. Advisors have the opportunity to serve as the guide to lead the way for many of these decisions, even going beyond the financial ones, which may include:

• Mapping out the retirement income journey and developing a plan for meaning and connection in retirement
• Decisions related to Social Security and important (and irreversible) timing decisions
• Determining the impact of health care costs and how to plan for the unknown
• Making course corrections because if there is one thing that is certain, it’s that the exact number needed for retirement is uncertain

Advisors are uniquely positioned to help navigate this unknown.

Retirement is not an event. It’s a life transition.

Many participants spend decades focused on retirement as a destination. They envision a retirement date, a target account balance, or a Social Security claiming age. However, retirement is less like reaching a finish line and more like beginning a new chapter of life. The challenge is that participants often arrive financially prepared but emotionally unprepared. Their career has provided structure, identity, social connections, and purpose. When work ends, they may lose far more than a paycheck. Research and experience suggest that retirees often struggle with questions surrounding meaning, routine, relationships, and identity during the first several years after leaving the workforce.¹

Advisors who recognize this reality can provide greater value. Instead of focusing exclusively on asset allocation and withdrawal rates, advisors can facilitate conversations about what retirement will actually look like.

• What will you do each day?
• What activities will replace work?
• What relationships will become more important?
• What gives you purpose and meaning?

Retirement success is often measured by account values. Yet many retirees discover that satisfaction depends just as much on having something meaningful to retire to as it does having enough money to retire with.

Tip! Advisors may find it helpful to suggest that participants start picking up hobbies, new communities, and ways to start transitioning into retirement as early as 10 years prior to their target retirement date.

Start with lifestyle, not assets.

Traditional retirement planning frequently begins with a portfolio balance and attempts to determine how much income that balance can generate. A more effective approach may be to start with the life the participant hopes to finance. The first conversation should focus on expenses, priorities, and lifestyle aspirations. Advisors can help participants distinguish between three categories of spending:

1. Essential expenses: expenses that must be paid for regardless of the market such as housing and food
2. Flexible expenses: expenses that improve the quality of life but can be adjusted up or down (e.g., eating out and gifts)
3. Irregular or discretionary expenses: non-recurring and infrequent expenses (e.g., travel, big purchases)

This exercise does more than create a budget. It creates clarity and helps participants understand what income must be protected and where flexibility exists if markets decline or circumstances change. This exercise does not discount traditional notions of an income replacement ratio (for example, 80%), nor is it to ignore the 4% rule.² But the reality is that some of these generalized rules do not have the same application to individual participants, which is where advisors can add exponential value in helping participants understand their unique needs and expectations in retirement.

Equally important, these conversations allow advisors to uncover a participant’s "why." Retirement is about aligning financial resources with life goals, whether those goals involve travel, family, volunteering, entrepreneurship, or simply greater freedom.

Tip! Advisors may find it helpful to incorporate an exercise with participants – individually or in a group – to build out the three expense categories needed to create a retirement budget.

Building a retirement paycheck, including Social Security.

One of the biggest psychological challenges retirees face is transitioning from saving to spending. Throughout their careers, participants are rewarded for seeing account balances grow. Suddenly, they are asked to do the opposite. Many retirees experience what behavioral economists call loss aversion. Withdrawals from retirement accounts can feel like losses, even when those withdrawals are part of a well-designed plan. As a result, some retirees underspend despite having sufficient assets, while others spend too aggressively.

Advisors can help by reframing retirement distributions as a paycheck. Rather than focusing on account balances, retirees benefit from seeing a predictable monthly income stream. Divide income into three categories:

• Dependable income: Social Security, pensions and guaranteed annuity payments
• Variable income: Retirement-account withdrawals and taxable investments
• Optional or supplemental income: Part-time work, consulting and other earned income

More specifically, few decisions have as much long-term impact as Social Security claiming. Yet many participants approach Social Security as an administrative exercise rather than a foundational retirement planning decision. Advisors can add value by illustrating tradeoffs associated with various claiming strategies. For example, delaying benefits can substantially increase monthly income, while coordinated claiming strategies can improve financial outcomes for surviving spouses.

Advisors may help participants evaluate waiting until age 70 to claim Social Security balanced with health, longevity, family circumstances, other assets, and retirement goals. When viewed as part of a broader retirement income strategy, Social Security becomes much more than just another benefit election.

Tip! Advisors may consider adding participant education related to Social Security, which can be delivered by the advisor or a partner, that can assist in illustrating the important decisions with claiming strategies.

Making course corrections.

Retirement should be approached not as a single election made on the last day of employment, but as a transition that begins before separation and continues through the first several years after retirement. Nor is the retirement date always entirely voluntary, and making a contingency plan is nearly as important as the preferred retirement journey.

Retirement education often assumes that participants will gather the facts, select the optimal strategy and proceed in a straight line. Real retirements are messier.

The initial withdrawal amount also should not be presented as a number that can be set once and ignored; the traditional concept of a one-time printed financial plan must turn into an iterative process that changes as people change. The participant need not become a tax expert, but should understand that “which account first?” can matter as much as “how much?”

The first year deserves special attention: testing the spending plan, establishing withdrawals, confirming tax withholding, updating insurance and estate documents, and learning whether the anticipated lifestyle matches reality.

Tip! Advisors may pre-plan to follow up with new retirees for a six- or 12-month check-in post-retirement given that the plan won’t be perfected at the retirement farewell lunch.

Building a bridge to retirement.

Retirement planning is very much an individual undertaking. However, the retirement plan that made retirement saving possible can help participants prepare for the journey with thoughtful plan design.

Education should be organized around decisions and timing rather than products. A retirement-transition program could lead participants through five connected questions:

1. When will work (and employer benefits) actually end? Include a contingency if retirement comes earlier than planned.
2. What must the household spend, and what can change? Separate essential, flexible and irregular expenses.
3. Which income sources begin when? Which are dependable, and which may vary over time? Coordinate Social Security, pensions, employment income, and withdrawals rather than considering each in isolation.
4. What risks could disrupt the plan? Address inflation, market declines, health costs, long-term care, longevity, death of a spouse, and diminished financial capacity.
5. Who will help review and carry out the plan? Identify advice resources, tax and legal professionals, trusted family members, and a schedule for check-ins.

Employers and providers should also be candid about the handoff. Some participants will remain in the plan; others will roll to an IRA, purchase an income product, engage an adviser or use several channels. Success should not be defined by retaining every dollar or directing every participant to the same solution. It should be defined by whether the participant understands the choices, avoids preventable errors, and leaves with a workable next step.

The next evolution of retirement readiness is not simply helping participants accumulate enough. It is helping them cross the threshold with confidence, understand the decisions immediately ahead and take the first steps into retirement without having to answer “Now what?” alone.

About Bonnie Treichel

Bonnie Treichel is also the Founder and Chief Solutions Officer of Endeavor Retirement, a consultancy focused on tools and training for financial advisors. Bonnie specializes in ERISA compliance and regulatory matters for plan sponsors, advisors and service providers. She also provides assistance with securities issues, DOL and IRS corrections, and serves as a fractional general counsel for clients. Bonnie is a nationally recognized ERISA expert.

Bonnie is the co-author of Your Retirement Sketchbook and has been quoted in publications such as The New York Times, The Wall Street Journal, Kiplinger, InvestmentNews, 401(k) Specialist, Ignites, PlanAdviser, NAPA Net Daily, and Journal of Pension Benefits. She is an active member of the American Retirement Association and has served in various leadership roles as well as the American Bar Association’s Tax Division where she was on the Lifetime Income Committee. She was awarded InvestmentNews 40 Under 40 in 2023, the ABA’s On the Rise – Top 40 Young Lawyers Award in 2022, and NAPA Top Influencers for 2024 and 2025. She is also a member of the Women in Pensions Network, the State Bar of California, the State Bar of Kansas, current advisory board member of RISA, LLC and board member for the FinServ Foundation.