More clients these days are deciding to work past typical retirement age, but their financial advisors may not always be up to speed on their clients’ plans. That’s why advisors should be moving from a straight focus on transactions to a more interpersonal approach, says Gordon Neufeld, a consultant in Hamilton, Ont.

Creator of the Best-Half program, which helps employees plan for retirement, Neufeld says: “Boomers want help determining where they’re going with their lives. They need a plan. And once they have that, the money usually sorts itself out.”

In fact, lots of would-be retirees take some time to settle these issues, even changing course after they’ve officially retired.

Peter Drake’s story makes the point. Although Drake retired from his position as an economist with Toronto-Dominion Bank when he was 60, he had planned to do some part-time consulting for TD while spending much more time on his passions, canoeing and cycling. But after two years, Drake found himself missing the stimulation of work. “I’m a failed retiree,” he laughs. “I realized that I have more fun working than not, and I really don’t like to work alone.”

So, when Toronto-based Fidelity Invest-ments Canada ULC came calling five years ago, Drake seized the opportunity to return to work full-time. Today, as Fidelity’s vice president, retirement and economic research, he’s busier than ever. “I do a lot of public speaking and write a monthly magazine column,” he says. “And I travel a lot — I took 18 flights from September to mid-October alone.”

Drake’s path reflects a trend that is reversing retirement patterns of the past. Earlier trends saw the median retirement age for Canadians fall to 60.6 from 65 between the mid-1970s and 1997. Since then, it has started climbing again, reaching 61 in 2005. And a 2010 Ipsos-Reid Corp. poll for Toronto-based Royal Bank of Canada found that 30% of Canadians between the ages of 35 and 54 expected to work during retirement. As well, the 20th annual RBC RRSP Survey, released in late 2009, indicated that almost one in three Canadians who were still working said they would never retire.

“Baby boomers are redefining retirement,” says Tina Di Vito, head of Toronto-based Bank of Montreal’s Retirement Institute. “Increasingly, we’re seeing people transitioning into and out of the workforce, with the aim of getting the most from their lives while they’re still healthy.”

The reasons for delaying retirement and/or returning to work vary with the individual, Di Vito says. In January 2009, BMO revealed that more than half of the pre-retirees it had surveyed were thinking of delaying their retirement, while 45% of those who were retired had said they would probably return to work in the coming year.

The BMO survey found that respondents were motivated to work longer primarily to earn money rather than for self-fulfilment, which had been the principal motivator in a similar survey three years earlier. In early 2009, of course, many people were just coming to grips with the financial crisis, which savaged so many retirement savings plans.

“In some cases, people simply don’t have enough money to retire,” says Drake. “Because of increased longevity, retirement savings have to last longer; so, you need more to begin with. And the current environment of economic uncertainty has made people nervous; a segment of the population is so concerned that they’re still working although they don’t have to.”

But there’s more at play than simple economic necessity. We’re living longer: at 65, Canadian women can expect to live another 22 years on average, while Canadian men have an average of 17 years ahead of them.@page_break@We’re also healthier. Canadians aged 65 have, on average, 15 years of healthy living to look forward to, says demographer David Foot: “As long as she’s healthy, the average boomer doesn’t see herself doing nothing professionally for 15 years. She wants to be intellectually challenged and make a contribution to society. That’s one major reason that many people will probably want to keep working, but not necessarily full-time.”

Lee Anne Davies agrees. Davies, a gerontologist and head of retirement strategies with RBC, says that while many boomers aren’t ready to retire, they don’t want to work the same way they always have: “Boomers want to keep working but on their own terms, whether it’s seasonal so they can escape winter or mornings only so they can volunteer in the afternoon. This is especially true of women in their 60s, many of whom are well educated but took time off to raise families.”

In light of this reality, employers are becoming more flexible and some are willing to hire long-time employees on a contract basis, she says: “That’s why we encourage people to talk to their employers before making any major decisions.”

Employment in retirement will intensify in the years ahead, says Drake: “There will be increased demand for older workers because fewer young people are entering the labour force.”

Fidelity’s research indicates that the largest proportion of those who work post-retirement do so for four or five years after retiring. One clear benefit of this shift is that it delays the age at which people start drawing on their retirement savings.

BMO’s Retirement Institute has created an interactive transition tool — Take Charge of Your Retirement — that provides a snapshot of the impact that working longer can have on retirement. This tool allows users to compare the options of working full-time a little longer to increase savings vs working part-time and transitioning into retirement.

According to Drake, the most difficult part of retirement planning isn’t financial: “The really hard part is envisioning what you want your retirement to look like.”

What’s required is a customized approach to retirement planning, says Foot: “From now on, every client will be unique. Some will be accumulating, some will be drawing down and others will be doing both at once.” That means advisors will need greater flexibility in their use of retirement-planning models. “If a client wants to keep working, how do you manage a pot of money that has income going in and going out in the same year? You need new models and calculations to do that. It’s certainly within the [financial services] industry’s expertise, but advi-sors don’t think in those terms yet.”

Davies cautions advisors against making assumptions about their clients’ retirement intentions: “Just because someone has reached a certain age doesn’t mean they’re ready to stop working. It’s up to you to ask relevant questions and listen carefully to the answers.”

RBC’s Your Future By Design program guides clients through a series of “life cards” designed to identify top priorities. “Once we have a deeper understanding of what the client wants from their retirement,” says Davies, “we customize a financial plan to meet those needs and address any obstacles we may have identified.”

The trend toward later retirement has permanently changed the planning conversation between advisors and their clients, agrees Di Vito: “It’s not just about asset accumulation and allocation anymore. You have to consider all the factors that go into planning for a successful transition to the next phase of the client’s life.” IE