In revealing audio clips, clients share the unexpected challenges they found in later life—and the financial choices they made to adjust.
AS MUCH AS SHE LOVED HER CAREER as a cancer researcher in Philadelphia and Boston, Lenora was looking forward to retirement. She planned to work, save and invest until age 65 and then head west to someplace sunny. “I love Southern California,” she says. “The sunlight makes you feel alive.”
“Preparing for retirement isn’t so much about devising rigid plans as gaining the flexibility to bend without breaking. Often people find that they have to make trade-offs.”— Cynthia Hutchins, Director of Financial Gerontology at Bank of America
But for Lenora, family came first. When she was just shy of 60, she left her job earlier than planned and moved to Pittsburgh to take care of her mother, who had always been independent but was now in her 90s and needed help.
“Many people spend years thinking about where they want to retire or how much they hope to save—and then life happens,” says Cynthia Hutchins, director of Financial Gerontology at Bank of America. “The true art of preparing for retirement isn’t so much about devising rigid plans as gaining the flexibility to bend without breaking. Often people find that they have to make trade-offs or course corrections.”
And often, life doesn’t stop at just one surprise: Another unexpected development came soon after for Lenora, when she was diagnosed with an early stage cancer. “Even after all those years of cancer research, that’s something you’re never prepared for,” Lenora says. “I don't take my health for granted any longer.”
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Lenora was looking forward to her own retirement when it became clear that her aging mother needed help. Becoming a caregiver to her mom required major financial adjustments. Click to hear part of our phone interview with Lenora.
A health crisis can change everything
With health concerns top of mind, she found her retirement goals in jeopardy. As she entered a year of surgery, chemotherapy and radiation treatments, Lenora worked with her longtime Merrill Financial Advisor, Michael Haberman, to review her most important financial needs. Unable to work part-time as she had planned when she moved to Pittsburgh, Lenora wanted help ensuring cash flow for her daily and monthly needs, so she could protect her savings for later on when she might need long-term care for her mom.
“A lot of people realize the importance of having their homes insured, but they don’t consider long-term care insurance. They have an easier time anticipating that a tree may fall on their house than imagining that they may be stricken with a long-term illness someday.”— Ben Storey, director of Retirement Thought Leadership at Bank of America
After talking over her options with Haberman, Lenora decided to rely mainly on the pension from her former employer to meet current needs so that she could preserve her retirement savings. To give those investments a chance to grow, she switched from a conservative, mostly bond portfolio to a more balanced mix, including stocks. The plan enabled Lenora to delay the onset of her Social Security benefits, which will result in larger monthly payments later on.
Such choices are an inevitable part of navigating life’s zigzags, notes Ben Storey, director of Retirement Thought Leadership at Bank of America. The key is to think ahead so you don’t get blindsided. “A lot of people realize the importance of having their homes insured, but they don’t consider long-term care insurance. They have an easier time anticipating that a tree may fall on their house than imagining that they may be stricken with a long-term illness someday.”
Rethinking a planned “early retirement”
Scott and Patricia, a couple with successful careers at the same pharmaceutical company in the Chicago suburbs, looked forward to a time when Patricia could retire early to spend more time with the couple’s school-aged kids, Ella and Christian. (The family is pictured together at the top of the page.) Their initial target was age 40, yet as lifelong savers who grew up in families facing financial challenges, they wanted assurance that moving from two incomes to one wouldn’t affect their goals, including paying for their children’s educations. “We’re worker bees,” says Scott, “but we always plan for the unexpected.”
Over the years, Pamela Wise, their Merrill Financial Advisor, “patiently walked us through a lot of scenarios,” Patricia recalls. “Best case, worst case. What happens if I retire now? What happens when the kids start their educations?” She worried that taking an early retirement would put their other financial goals in jeopardy.
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Patricia wanted to retire at 40, but she needed assurance that her family's other financial goals wouldn't be jeopardized. Working a few years longer was only one adjustment she ended up making. Click to hear part of our phone interview with Patricia.
The biggest challenge that Patricia and Scott faced was being able to stick to their rigid savings goals once Patricia retired. Wise says that their disciplined saving over the years—in small and large amounts, in retirement accounts and elsewhere—really made the difference. Patricia credits Wise with giving them the confidence they needed to feel ready to roll with the changes to their timeline. “When we got to a point where all scenarios made me feel comfortable,” Patricia says, “I said, ‘OK, I’m ready now.’”
That time came nearly eight years after they’d anticipated Patricia would be able to retire. Putting off her retirement for that long wasn’t their first choice, but it has left them reassured. “The best way to plan for the unexpected is to make sure you have enough money saved to address whatever happens,” Scott says.
More days to enjoy—and look forward to
Patricia is now spending more time with her children, including leading her daughter’s Girl Scout troop, teaching the girls confidence, and even envisioning opening a nonprofit. Scott is still working and plans to retire at 60, but the couple is starting to talk about their plans for down the road. They look forward to traveling—“I love my kids to death, but I would love to do some more traveling with just my wife,” Scott says—or maybe just settling into a lake house or beach house.
The biggest retirement surprise, according to an MIT survey? “Retirement is a lot longer than you anticipate. These retirees were surprised how much time they had.”— Joseph Coughlin, director of the AgeLab at Massachusetts Institute of Technology
As for Lenora, now 65 and free from cancer, she knows that, like her mother, she too may live well into her 90s—with a retirement that stretches as long as 30 years.
In 2013, Joseph Coughlin, director of the AgeLab at Massachusetts Institute of Technology (MIT) and the author of “The Longevity Economy,” asked 200 long-ago MIT graduates (average age: 79) what their biggest retirement surprise was. “The overwhelming answer was that retirement is a lot longer than you anticipate,” Coughlin recalls. “These retirees emphasized that they were actually surprised how much time they had.”
Whatever changes life brings next, Lenora isn’t hurrying things. She cherishes the time she has with her mother, who just turned 100. She has just begun collecting Social Security benefits—which has made her less reliant on her assets to meet expenses and enabled her to invest for the longer term. She’s considering volunteer work, traveling and taking on some home improvements. And she still has an eye on that sunny place out west, when the time feels right. With a renewed sense of peace about her health and finances, she says, “I don’t feel like I need to fight the future.”
Case studies are intended to illustrate brokerage products and services available at Merrill and banking products and services available at Bank of America. You should not consider these as an endorsement of Merrill as an investment advisor or as a testimonial about a client’s experiences with us as an investment advisor. Case studies do not necessarily represent the experiences of other clients, nor do they indicate future performance. Investment results may vary.
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