If you spend your entire career following a financial plan, saving and investing isn’t only a commitment, it’s also a mindset. And it can be very challenging to switch from a “saving” to a “spending” mindset once you retire. It’s almost as if you can’t permit yourself to enjoy your own money!
If that sounds like you or your spouse, here are three questions you can discuss with your financial advisor to help you get a greater Return on Life from your retirement assets.
1. Am I going to outlive my money?
Running out of money too soon is probably the number one concern among retirees who are living far below their means. No senior wants to become a burden to their adult children or face a sudden health or housing crisis that breaks the bank.
While a financial advisor can help you make more detailed projections, an easy first step is to start scaling back on unnecessary expenses as you enter retirement. Cancel subscriptions and memberships you aren’t using. Get your grown children off your cell phone plan. Sell that second or third car you never use. And pay down high-interest debts such as credit cards.
Now you can create a monthly budget. Don’t forget to include your new healthcare premiums, whether that means Medicare or private insurance you’re buying until you turn 65.
Finally, compare your monthly expenses to your annual withdrawal rate and any income you expect to earn from part-time work. For some added peace of mind, consider adding an emergency savings account to your retirement plan. It should include enough cash to cover six months to a year’s worth of expenses. And if you don’t like how these numbers add up, talk to your advisor about what adjustments you can make.
2. Will my plan stay on track during life transitions and volatility?
Plotting out your upcoming life transitions and planning ahead can help.
For example, if you know you want to move to a beachfront condo in five years, various dials on your financial plan can be adjusted to help support that goal. At the same time, you want to be mindful of the contributions you want to make to your granddaughter’s college tuition in seven years. Even better, by planning for what you can see coming, your financial plan can have some built-in flexibility. That way your plan can accommodate goal changes or money emergencies that spring up.
Regarding market volatility, if you have a diversified portfolio as well as cash savings, your advisor should be able to help you rebalance as necessary to take advantage of new opportunities and cope with short-term disruptions. It can also help to create a bucket that helps position you to get through the volatility and reduce the chances that you have to sell securities at depressed prices.
3. When should I start giving?
If a fiscally conservative lifestyle is keeping you comfortable and allowing you and your spouse to have a little fun, maybe you don’t need to spend any more than you already are.
Instead, think about shifting some of your giving goals away from your legacy plan. It might be more rewarding to see your generosity in action now if you help a family member get on their feet or contribute to a charity that’s important to you. You could even start a family foundation and involve your heirs in building a lasting mission.
Ready to start getting the best life possible with the money you have? Make an appointment to work through our Life-Centered Planning tools and you’ll see a wider and more fulfilling range of possibilities for your retirement.
This week’s first article fits nicely with the opening to this week’s blog. It suggests that we retire (at least some) of the fears we have about running out of money in retirement.
Here are the links to this week’s articles as well as a brief description of each:
Are you concerned about running out of money in retirement? You may save and invest conscientiously while working. When you retire, changing from saver to spender can be difficult. In last week’s blog, I shared a story discussing how experiences matter. If you find you’ve “over-saved,” why not share some of your money with family or the needy? It can bring great joy.
America is returning to normal – albeit slowly. But many Americans continue to work from home. According to this article, office attendance is at just 33% of its pre-pandemic average. That lags just about any other industry for which good data exists. Some believe the number of days we spend in the office will never go back to its pre-pandemic average. Employees don’t want to go back. They believe they’re getting better at working from home. What does this potential long-term shift in office work mean? Take a look at the article to find out.
We often take advantage when items we like are on sale. But when stocks fall, many of us run the other way out of fear. Emotions drive this reaction. We may sell stocks because we don’t want to see our losses grow even larger. This blog looks at how we would fare if we bought stocks in the Nasdaq Composite whenever it fell more than 20%. Buying stocks when the market drops isn’t easy. We can realize significant value by buying stocks when they’re “on sale.” We may suffer further losses along the way but check out the long-term returns. It’s also important to diversify. That can also help us keep our emotions in check. We don’t know which segments of the market will underperform at any given time.
No matter who you are or where you live, a week consists of 168 hours. What separates us is how we use those hours. We can do anything but not everything. When we say yes, we obligate ourselves to do something. Saying yes comes with a cost. Doing one thing can keep us from doing another. When choosing what to say yes to, pick carefully. It’s not easy to say no. I suspect we should all say no more often than we do.
While we know that creating a will is important, many of us put it off. Or we write a will when our kids are young and don’t think much about it after that. Many times, when it comes to our wills, it’s out of sight, out of mind. That’s one of the reasons those over 50 fail to write a will, update an existing will, or make other estate planning decisions. Another thing that can cause us to put this important task off: We don’t want to make difficult decisions. We also don’t want to think about our death. Read the article to learn about the other three reasons we don’t write or update our wills. You’ll also find some suggestions to overcome these reasons.
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Phil Weiss founded Apprise Wealth Management. He started his financial services career in 1987 working as a tax professional for Deloitte & Touche. For the past 25+ years, he has worked extensively in the areas of financial planning and investment management. Phil is both a CFA charterholder and a CPA.
Located just north of Baltimore, Apprise works with clients face-to-face locally and can also work virtually regardless of location.