The most overlooked factor in aging well: Your social portfolio

As lifespans continue to rise, the retirement stage of life is also lengthening. It’s no longer seen as an end, but the beginning of a new complex stage of life.

Typically, when we think of retirement we wonder about finances and physical health—did I save enough to live the life I want?

But John Diehl, Certified Financial Planner (CFP^®) with The Hartford and Hartford Funds, says because of this new longevity it’s important to start focusing on not just our investment portfolios, but our social portfolios too, made up of the people closest to us.

For more than two decades, John and his team have partnered with the MIT AgeLab to uncover what people think about lifestyle trends, who they trust, and the future of retirement. As part of this work, they’ve identified how financial professionals can help clients assess and strengthen their social portfolios by asking future lifestyle questions and considering how their lives will change with age.

“The AgeLab is a group of about 40 researchers located on the main campus of the Massachusetts Institute of Technology in Cambridge, MA”, explained John. “Even though it is part of the Engineering School at MIT, many disciplines are represented in its staff—psychologists, sociologists, physiologists for example, all studying changing demographics, the impact of technology and changing lifestyles.”

It’s the research that focuses on what the shifting demographics mean for retirement that stands out the most for John. “The AgeLab aids our understanding of areas ranging from caregiving and family dynamics to home automation. These are not topics that seem to directly connect to the financial management of a portfolio, yet if you follow the path, finances usually come into play at some point.”

John also recognizes the financial advisor role is changing, saying that while most advisors have been focused for the past few decades on generating an investment return in their client’s portfolio, that’s no longer the total goal.

“Our job now is to think holistically about the consumer, the entire client. That thinking needs to incorporate their emotional well-being, physical well-being and financial well-being. I believe that advisors who are helping to educate and anticipate challenges and opportunities that our clients have never before experienced, are doing the right thing. That also includes helping them to think about continuing to build and maintain strong social relationships as they age or in other words—monitoring their social portfolio.”

If you think about an investment portfolio, it's usually a diversified set of assets that we're hoping produces a return that can help us sustain the lifestyle we envision going forward. In a way, our social connections do the same thing. Ideally, a social portfolio is made up of different types of friends that span different types of activities.

When we think about a social portfolio, diversification is an important consideration. For instance, if many of my friends are from work and I lose my job or leave my job, I may also be leaving much of my social circle. One of the other attributes MIT has shared is that our social portfolio should integrate younger people as we age.

By integrating younger people, you’ll virtually guarantee that you won’t outlive your social network. You don’t really want to be the “last man standing.” Some would argue that it beats the alternative, but I would argue not if you’ve ever met someone that’s lost everyone around them that makes life worth living!

Research has shown from both a mental and physical aspect, relationships are key to a healthy lifestyle and benefit us as we age in many ways. One of the lessons we learned during the pandemic was that regardless of age, we all now know what it feels like to be isolated from the people, activities and organizations that make life worth living. It’s pretty frustrating—and lonely. For many of us, it was the onset of the pandemic that forced us into that situation, but we should understand that as we age, sometimes it’s self-induced. If we don’t intentionally try to expand our social network, we will find ourselves in a similar situation due to natural attrition. Lacking initiative, advanced age can make that an even more difficult challenge than it may have been in younger years.

No, it’s not too late. However, I believe we need to be more intentional about making friends as we age than perhaps we were earlier in life. At younger life stages, we may have been in social settings and routines that created an ideal situation for creating new relationships. That said, some may think that it’s just as easy to make friends at later ages as it was when we were younger. Research generally shows that we peak in friendships in our late-teens to mid-20s. I would argue that this is largely a function of our station in life—growing our families and careers. Retirement is generally regarded as a time to slow down, but unless we’re intentional about finding new social outlets, we may not find ourselves in an environment or in a routine which is conducive to making friends.

A portfolio is something we typically have to continue making investments in over time. Most relationships fail not because of drama or some falling out, but because of lack of maintenance. There are three key things we have to do to invest in our social portfolios: Dedicate time to your relationships, make sure your support group is diversified and monitor it over time. Like a good portfolio, things change, and we have to pay attention to it—we don’t just set it and forget it.