Why emotional readiness is one key to retirement

“Retirement isn’t just about number crunching; it is a significant emotional transition that many
clients simply aren’t emotionally prepared for,” says Financial Planning Association (FPA) President Paul Brahim. “As more Americans near retirement, it’s imperative that financial planners do more than just manage money. They also need to help clients deal with the emotional aspect of this new life phase.”

The FPA and the Journal of Financial Planning, with support from Finance of America, recently released the 2025 Trends in Retirement Planning survey report. This report provides a look at the evolving challenges and priorities shaping retirement, including the emotional readiness of many consumers for retirement.

Based on feedback from 167 financial planners, the report suggests that planners are positive about their clients’ financial readiness, but many are concerned about the emotional and lifestyle adjustments of retirement. Rising healthcare costs and the challenge of saving enough for a long retirement are also major risks.

An abrupt life change

So why is emotional readiness such a major issue for retirees? “When you retire, your whole life changes, and it’s abrupt,” explained Brahim, who is also managing director and financial advisor at Wealth Enhancement. “Yes, you plan, you think about it. You envision it. Then one day, it happens. You were working a day ago. You had lunch with friends with common interests and challenges. You had purpose. You were problem-solving, contributing, earning money. The next day, you very well may have none of that. The sense of loss can be profound. In fact, retirement is considered by many to be one of the most significant stressors in our lives, on par with divorce and the death of a spouse. Without emotional preparation, retirees may experience stress, depression, and a sense of purposelessness.”

Importantly, Brahim asked: “Are we being pushed to retire – health issues, a loved one’s health issues, burn-out, or right-sizing? Or are we being pulled to retire – a desire to do something different like volunteerism, a greater focus on family and relationships, travel, or even a second career that’s a passion and not just a job?” The principal driver can set the emotional tone, he said.

In addition, Brahim pointed out that when business owners are asked about the first year after selling a business, 75% suggest that they don’t just regret it, but rather deeply regret selling their business. “The biggest reason cited is lack of purpose. We need purpose – both head and heart issues in our lives to provide satisfaction,” he said.

Why emotional preparation gets overlooked

Brahim also explained why so many advisors sometimes ignore the emotional and lifestyle adjustments their clients must make in retirement. “Clients often tell us about the things they’re going to do in retirement: golf, fish, travel, garden. Advisors misinterpret things retirees do with their time as purpose. They’re not. Time fillers aren’t purpose fillers,” he said.

Also, emotions are private, Brahim added. Negative emotions like fear and loss tend to be even more private. Unless there is a strong bond of trust between a client and an advisor, these issues may not be discussed at all.

“I’ve had conversations with retiring couples where one spouse says to the other: 'After all these years together, I never knew you felt that way.' If it’s difficult to discuss with your spouse, how much more so with your financial advisor?” he asked.

In addition, Brahim pointed out that many advisors focus primarily on financial planning and may lack training in addressing the emotional and lifestyle aspects of retirement. At the same time, clients often prioritize financial security over emotional readiness, leading advisors to follow suit.

Advantages of emotionally ready retirees

Emotionally ready retirees tend to experience greater satisfaction and fulfillment, Brahim said. They are better equipped to handle the transition, maintain social connections, and engage in meaningful activities, leading to improved mental health and overall well-being.

Brahim then provided some steps that advisors can take to help their clients become emotionally ready:

• Encourage them to envision their post-retirement life and set personal goals.
• Facilitate discussions about emotional readiness and potential challenges.
• Recommend seeking support from therapists or retirement coaches.
• Help them build a balanced retirement plan that includes social and recreational activities as a
  complement to a purpose-driven life. “Simon Sinek taught us that it’s all about the 'Why,' ” Brahim said. “Help them find their way in this next chapter of their lives.”

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