5 things to think about – By Dave Coen
This is a question that I get a lot from clients as we plan and update their family’s journey from time to time.
There is no “One size fits all” answer, but rather a series of questions and answers we go through in order to determine what the options are and what goals each family has.
Here are 5 things to think about:
Let’s identify the reason first
Many times, people assume that their retirement date is when their company tells them, or when they can get Social Security, or when their pension plan kicks in.
People retire for different reasons, and the first step is for people to identify the reason they want to retire. A good place to start is to list both the benefits and the drawbacks at a specific time. This helps to identify which side of the list is stronger to give us an idea of what is motivating this decision. Everyone needs to make their own list, but here are some thoughts to get you started:
Benefit/Positive:
- I want to live the good life.
- I want to spend time with my family.
- I want to travel.
- I want to pursue a different passion/hobby.
Drawback/Negative
- I don’t like my job or my boss.
- Stress and burnout from my job.
- Ill health – for me or a family member (High on the list over the past 10 years)
- Unable to adjust to a company takeover or new management or vision.
What kind of Lifestyle do I want?
Once the reasons to retire have been identified, then then the next step is to make sure there are resources available to achieve your desired lifestyle or you could end up frustrated and unhappy.
- Where do I want to live?
- What activities do I want to pursue?
- Have I considered what my spouse would want?
- How often and where would I want to travel?
- What are some of the things on my “Bucket List”?
Do I know what I will need? – This part is crucial to planning
One of the first questions that I ask people who are considering retiring is “Do you know how much money you will need each year?” Typically, the answer is a guess.
I truly encourage folk who are thinking of retiring to start an expense list or budget for a year, just tracking what they currently spend.
This can be a detailed budget listing all the categories that you spend money on each month like I personally do (I cannot recommend anything to my clients that I don’t do myself), or just a general notation of how much is coming in, how much goes out, and how much is currently going into savings.
I would recommend somewhere in between so that you actually identify a list of things that you spend money on now, the ones that will be eliminated, and which ones you will need to add in because you are retired.
If you do this for a year before you retire, then you should be in excellent shape for the next step.
Have I run the numbers?
The next step is to start putting the numbers together.
- What will I NEED for my spending?
- What will I WANT for spending?
- Add in inflation for each year
- Add up all my income sources – pension, social security, rental
- Now do projections on my investments, growth rate, tax implications
- Look at what I will need to withdraw from my assets, over and above my income sources, in order to live the lifestyle that I want.
This is typically where the 4 Vital Questions every Financial Advisor needs to answer comes in to play. I will happily do the math and projections for you.
Retirement is not a date Retirement is something that we should be uniquely designed. It does not HAVE to be a specific date if you have planned properly. It could possibly be a gradual process or a hybrid approach where we could systematically work our way out of a full time job, or have other alternatives that would give us the flexibility or freedom that you are looking for.
About Dave
Dave Coen is a Retirement Income Certified Professional (RICP®) and Financial Advisor with SageView Advisory, and CEO of College Planning America. Along with his retirement financial industry experience, he is a College Planning Specialist. He works closely with individuals and families to provide comprehensive financial planning that addresses all elements of their financial picture. Learn more by connecting with Dave on LinkedIn. Please feel free to contact me if you would like to discuss how we can help you with your family’s plan either in person, over the phone, or on Zoom
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