Do you have the freedom to retire?
Are you in a financial position to stop working? If you are, and you haven’t, what’s stopping you?
Do you want to retire? Are you afraid of it? Are you experiencing uncertainty?
How can you answer these questions and overcome what’s standing in your way?
That’s what I want to help you do.
As a financial advisor, I’ve been helping people to enjoy happy retirements for over 20 years. I’m honored to be named to Investopedia’s list of the top 100 financial advisors many years running.
Here’s what we’ll cover:
- Finding peace of mind
- Being financially prepared to retire
- Being psychologically prepared to retire
Let’s get started.
Finding peace of mind
How often do you think about peace of mind? What does it mean to you?
Merriam Webster defines it as a feeling of being safe or protected. That sounds right to me. I think that’s what we need in order to be comfortable stepping away from the life we’ve had until this point.
You’ve probably spent 40 (or more) years working. To feel you’ve got the freedom to step away from that life, it’s essential you address your financial needs, as well as your psychological needs. I people make the mistake of focusing on one, and ignoring the other all the time.
To have a successful retirement, you need to have peace of mind in every area of life.
Being financially prepared to retire
There’s a lot that goes into the financial side of retirement. Failure to think it all the way through typically results in one of two scenarios; either you spend too much money and run out, or you’re terrified to spend and you end up living hand to mouth. Both are lousy and I want to help you avoid them.
Here are the main areas I encourage you to focus on finding financial peace of mind:
- Pre and post-retirement budgeting
- Key risks to mitigate
- Guaranteed lifetime income
Budgeting
If you’ve been able to accumulate enough assets to retire, you understand the importance of budgeting. On the flip side of that coin, if you’ve worked in a role where you’ve got a pension, fantastic. Either way, it’s time to re-do your budget.
It’s possible your pre-retirement budget will be the same as your post-retirement budget, but not likely. When you retire, a lot changes:
- Will you be making less money?
- Will your insurance premiums change?
- Will your social budget change (every day in retirement is Saturday)?
- What expenses will go away?
- Will there be additional expenses?
What’s important is that you go through your budget and get as much clarity as you can on what your fixed and variable expenses will be on a monthly basis.
You can download our Monthly Budget Guide for free.
Key risks to mitigate
There are three key risks I want you to be aware of and plan for. The more we can position ourselves for success, the better we can withstand bumps in the road.
- Market risk
- Longevity risk
- Healthcare risk
Market risk
Historically, the stock market goes up 53.7% of the time, and down 46.3% of the time. Fluctuations are fine when we’re 35, but as we get closer to retirement, the more at risk we are from corrections and crashes. If you’re within five years of retirement, it’s wise to have most your assets in conservative investments.
Longevity risk
It’s odd to think about living a long life as a negative. But if you outlive your money, you’re in trouble. If you’re 65 years old, it’s entirely possible you’ll live another 35 years. You’ve got to plan for how to make your money last for as long as you’ll need it to.
The Social Security Administration has a life expectancy calculator if you care to know.
Healthcare cost risk
Total healthcare costs for a couple in retirement have been estimated at over $300,000. As you’re putting together your retirement income plan, this potential cost must be considered.
Guaranteed lifetime income
We don’t want assets in retirement; we want income. Most of us are used to getting a paycheck every other week, and we plan our lives accordingly. Why should that be any different in retirement? Earlier, I mentioned how it’s common to fall into the trap of spending too much, or nothing at all. When we have guaranteed income coming in, this helps mitigate that risk.
How much and how do I get it?
A rule of thumb is this; have enough guaranteed lifetime income to cover your fixed monthly expenses. This is another reason it’s critical to know your post-retirement budget.
We get guaranteed lifetime income from Social Security, pensions, and annuities. As you’re creating your retirement income plan, look and see how much you’ll have coming in. If you won’t have enough from Social Security and pensions, consider an annuity to cover any shortfall.
Having guaranteed lifetime income provides financial peace of mind. You’ll know it will hit your checking account on the same day, for as long as you live.
Being psychologically prepared to retire
Work gives us a lot of things, aside from just a paycheck. It also gives us:
- A place to go
- Something to do
- Position and prestige
- Community and friendships
- Meaning and responsibility
It’s unwise to discount any of those things. I highly encourage you to think about everything you’re currently getting from work, and what you’ll replace them with.
Like budgeting, it’s important to think about how you’ll spend your time once you’ve retired. I like to focus on six areas:
- Family
- Community
- Work and financial
- Wellbeing
- Personal development
- Peace of mind
Family
What will your family relationships look like in retirement? How often will you see them and what will you do together?
Community
Who and what is your community? What will you do for fun, and who will you do it with?
Work and financial
Will you work during retirement? Many of us find meaning in responsibility. How will you find this?
Wellbeing
It’s important to be good stewards of our physical, emotional, and mental health. What will you do to nurture yours?
Personal development
What will you learn simply for the sake of learning?
Peace of mind
Beyond financial peace of mind, where will you find overall peace of mind? Perhaps religion, faith or spirituality will be a part of your life?
To help you dig deeper into this, you can access our Goals course for free.
Resources mentioned
I want you to have and to feel you’ve got the freedom to retire. It’s important to have peace of mind in as many aspects of life as we can. I invite you to connect with one of our Certified Partners to get any question answered, or for a no-cost conversation.
We’ve also got our Retire Happily course I encourage you to check out.
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