It’s tempting to think of retirement as a math problem. Save enough to leave the paycheck behind and, voilà, the rest is sunsets and sailboats.

Survey data and advisors’ anecdotal experience shows retirees with plenty of money still experience uncertainty. Enter the “not great, but not bad” retirement experience, a state of being reported by 35% of respondents to Schroders’ latest retirement survey. Some advisors, who have ample experience working with clients in this category, said the survey results were less about money and more about the psychological side of retirement. Getting retirement “right,” they broadly agreed, requires a plan that goes beyond dollars and cents to answer hard questions about identity, purpose and meaningful social connection. Advisors who help clients answer these questions can enable them to move from the not-great-not-bad category to “comfortable” or even “living the dream.”

Asi, Asi

The Schroders survey offers a decidedly mixed view of retirement wellbeing. Asked how they are experiencing life after work, most landed somewhere in the middle:

• 4% are “living the dream.”
• 37% are “comfortable.”
• 35% are “not great but not bad.”
• 19% are “struggling.”
• 5% are “living the nightmare.”

One big challenge is that many haven’t considered what day-to-day life in retirement will actually look like. “People focus on the fun parts like golfing every day, traveling, spending time with grandkids,” said Jamie Bosse of CGN Advisors in Manhattan, Kan. Those things are wonderful, but eventually, the vacation feeling wears off. “For some, it can even feel like a grieving process as they let go of who they were in one chapter of life, and begin discovering who they’ll become in the next.”

Others fall victim to their success as lifelong, diligent savers. “For ardent savers, starting to spend down their nest egg is often met with reluctance,” said Kevin Feig, founder and advisor at Walk You To Wealth in Boston. “For my clients, the key to a successful retirement is having a financial plan that supports a broader time plan.” Questions to answer include: How will you spend your time? What’s important to you? Will working part-time give you a sense of purpose?

A Retirement Paradox. Mitchell Kraus, an LPL Financial advisor in Santa Monica, Calif., attributes the not-great-not-bad retirement phenomenon to the “high-achiever’s paradox.” The very drive that helps people build meaningful wealth makes stepping back feel like a threat to identity, not a reward for success. “I have a meaningful number of clients who grew up with financial anxiety so deeply wired that no spreadsheet, Monte Carlo simulation, or logical argument will convince them they have enough,” Kraus said. “That’s not a planning problem. It’s a psychological problem, and standard financial advice doesn’t touch it.”

What may move the needle is helping clients map how they’ll invest their time, relationships, health, community and legacy with the same intentionality they used to build their portfolio. “The clients I see thriving aren’t necessarily the wealthiest,” Kraus said. “They’re the ones who designed their next chapter before they left the last one.”

Like a bridge over troubled waters.

Advisors with retiree clients probably know the basics of bridge strategies: In simple terms, they use other assets or income sources to cover living expenses while delaying Social Security. The core idea is straightforward: Monthly benefits increase 8% each year through age 70, making bridging a powerful way to increase guaranteed lifetime income. The hard part is actually building that bridge. Does one simply set aside cash? Draw from the total return portfolio? Maybe buy an annuity?

For Nathan Dutzmann, CIO at Round Table Investment Strategies, the preferred strategy is crafting a bond ladder composed of Treasury Inflation-Protected Securities, known as TIPS. Though it can be tricky to model in financial planning software, the approach resonates with clients, Dutzmann said, especially those worried about sequence of returns and longevity risks.

Building Bridges

The first step is helping clients understand what TIPS do and why one would delay Social Security in the first place. “Social Security income has two key characteristics,” Dutzmann said. “They are guaranteed lifetime income and inflation adjustments.” TIPS share one of those characteristics, i.e., inflation protection, thanks to the fact that they enjoy both increasing principal and larger interest payments over time. So, a TIPS ladder can very effectively preserve purchasing power during the bridge years. “That alignment is important because the whole purpose of delaying Social Security is usually to secure larger real lifetime income later in life,” Dutzmann said.

The next key step is helping clients set a realistic budget, both for the bridge period and afterward. Dutzmann’s firm uses an in-house tool to assess clients’ inflexible vs. flexible spending needs and then compare these with guaranteed versus risky future income sources. “Clients seem to understand that terminology more than ‘wants’ versus ‘needs,’” Dutzmann noted. “Wants versus needs is a very values-driven and abstract comparison.”

For many, TIPS ladders of longer durations can be appealing, and some even choose to build a maximum length 30-year TIPS ladder to effectively take longevity and inflation risk off the table. Generally, however, a shorter TIPS ladder is preferred to boost guaranteed income, while leaving a substantial portion of the nest egg invested in the stock market.

Another Big Fan. The prominent retirement researcher Michael Finke is also a fan of TIPS ladders, including longer ones. A 65-year-old client can go out today and buy a ladder of TIPs through the age of 95, Finke said, and it will pay about 4.7% after inflation at today’s rates. That’s in line with what a conservative spending plan would look like coming out of the portfolio. “In effect, a 30-year TIPS ladder solves the retirement problem outright,” Finke said. “The thing is that people don’t understand that unless an advisor is there to guide them.”

The only bad questions are the ones left unasked; that’s especially true in retirement planning.

Anxiety about their lives after giving up full-time professional careers might be the biggest pressure facing Americans; most fear running out of money more than death itself. Much of that anxiety comes from uncertainty: Many workers don’t know what kind of help they need, much less where to get it.

Yet despite those concerns, most pre-retirees aren’t seeking guidance from the firms already managing their workplace retirement plans. About 71% of 401(k) participants age 50 and older have not sought advice from their plan provider in the past year, according to a recent report from Cerulli Associates. While that figure might paint a bleak picture of Americans’ retirement preparedness, there is an upside: As workers increasingly look for more personalized guidance, advisors have a growing opening to engage new clients approaching retirement.

I Need Somebody, Help!

Participants who do meet with their recordkeeper generally find the experience valuable. The challenge is getting them to engage in the first place. Many employees make little use of their provider’s online planning tools and calculators, which are often viewed as cumbersome, requiring extensive financial inputs while offering limited or unclear guidance.

At the same time, demand for human advice remains strong. Participants overwhelmingly view personal advisors as trustworthy, and roughly two-thirds of survey respondents who do not currently work with an advisor said they expect to hire one soon.

The Cerulli report also found:

• Nearly half of pre-retirees lack a formal written retirement plan. Those who have one report significantly greater confidence in their ability to maintain their standard of living in retirement.
• Participants say the most important qualities in an advisor or plan provider are understanding their personal and family situations, being accessible and providing clear, detailed financial planning guidance.
• Meanwhile, just 9% of those looking to hire an advisor see asset allocation as “absolutely essential.”

The Right Stuff. “The most essential aspect of [plan participants’] advisor relationship is not having their advisor manage their portfolio, but instead client service components including personalization, availability for questions and confirming they are on the right track,” said Elizabeth Chiffer, senior analyst at Cerulli.