The retirement planning gap

Because when clients reach retirement — especially those who are financially secure — the challenges they face are rarely about whether the portfolio will last. More often, they are behavioural. They are questions of identity, purpose, time and decision-making under a unique set of conditions.

This is the retirement planning gap. Many retirees achieve financial independence after decades of saving. What they find when they get there however is unexpected. Neither they nor their advisor is prepared.

The structure of their lives changes overnight. The routines that anchored their days disappear. The identity tied to their profession fades. The social interactions that came with work diminish.

Nothing is wrong in the traditional sense. The plan worked. But the experience doesn’t always match expectations. This is common, particularly among high-functioning individuals who have built their lives around productivity, responsibility and contribution. For this group, retirement represents not just a change in income, but a redefinition of self.

The biases that shape retirement decisions

Behavioural finance has long focused on how unsure investors make decisions. Retirement introduces a different kind of uncertainty — one that is less about markets and more about life structure.

Four well-documented biases are relevant:

1. Loss aversion. We tend to feel losses more acutely than gains. In retirement, this extends beyond financial capital. Clients may experience loss of status, influence, routine and social engagement. Even when retirement is voluntary, these losses can create hesitation or regret.
2. Status quo bias. Investors often delay retirement, not because they cannot afford to retire, but because continuing to work is familiar. The known structure of work is preferred over the ambiguity of retirement.
3. Overconfidence in adaptation. Clients frequently assume they will figure out how to spend their time once they retire. In reality, transitions without intentional planning often lead to a period of dissatisfaction or drift.
4. Identity anchoring. For decades, identity is tied to occupation. When that anchor is removed, there is often no immediate replacement. This can create a sense of disorientation that is difficult to quantify but highly impactful.

These are not edge cases. They are predictable patterns of human behaviour. Yet, they are rarely incorporated into the retirement planning process.

The limits of a financial framework

Traditional retirement planning focuses on variables that can be measured: savings rates, asset allocation, withdrawal strategies and longevity assumptions. These are necessary inputs. But they are not sufficient.

A growing body of research suggests that once individuals reach a threshold of financial security, incremental wealth has a diminishing impact on well-being. Instead, outcomes are driven by how individuals use their time, maintain social connections and develop a sense of purpose.

In other words, the determinants of a successful retirement are largely behavioural.

This creates a mismatch. Advisors solve for financial sufficiency, while clients live the behavioural reality. Bridging that gap requires expanding the scope of the conversation.

A shift in the advisor’s role

For investment professionals, this presents both a challenge and an opportunity.

The challenge is that behavioural factors are less tangible than financial ones. They are harder to measure, harder to model and often more personal.

The opportunity is that addressing them meaningfully deepens the advisor-client relationship and improves outcomes in ways that portfolios alone cannot.

This does not require abandoning the financial framework. It requires complementing it. Five practical shifts:

1. Talk about what retirement will look like. Clients seldom think this through in detail. Guide the conversation.
2. Discuss time use explicitly. How clients expect to spend their days is a leading indicator of satisfaction.
3. Explore identity and transition risk. For professionals with strong career identities, this is often the central issue.
4. Reframe withdrawal discussions. Spending is not just a financial decision — it is a behavioural one. Clients anchored to accumulation may struggle to transition to decumulation.
5. Normalize phased retirement. A gradual transition often reduces behavioural friction and improves long-term adjustment.

These conversations do not replace portfolio management. They enhance it.

Help your clients understand that financial readiness is only part of the equation. The more important question is how life will be structured once work is no longer the organizing force.

Ask them: What will give your days meaning? How will you maintain social interaction? What will replace the structure of your work schedule? How will your identity evolve?

These are not abstract questions. They have direct implications for well-being, decision-making and even financial behaviour in retirement.

For example, individuals who lack structure or purpose may be more prone to reactive financial decisions — seeking stimulation, responding to short-term market movements or becoming overly conservative due to perceived risk.

Behaviour does not disappear in retirement. In many cases, it has an even greater impact.

A research opportunity

To better understand how individuals experience this transition, I am preparing a Canadian research initiative to collect data on retirement beyond finances — focusing on purpose, time use, identity and perceived well-being.

For advisors, this represents an opportunity to contribute to a broader understanding of client outcomes. For investors, it offers a structured way to reflect on their own expectations and experiences.

The goal is not to redefine retirement planning, but to expand it — to align what we plan for with how people actually live.

Retirement is often described as a financial milestone. In practice, it is a behavioural transition. The portfolio may enable the decision to retire. But it does not determine how retirement is experienced.

That outcome is shaped by how individuals allocate their time, maintain connections and construct meaning in a phase of life with fewer external constraints.

For the investment industry, the implication is clear. If we continue to treat retirement as a purely financial problem, we will continue to miss the most important variables. For investors, the takeaway is equally straightforward. Retirement is not just about having enough to live on. It is about having something to live for.