There’s a good reason why many fiduciary advisors have replaced the outdated phrase “retirement planning” with terms like “life-centered planning” when describing what we do. A strong financial plan isn’t designed to just get you to retirement. It’s designed to help you get the most out of your assets through every phase of your life. Our process can certainly help to prepare you, your family, and your money for retirement. But the process doesn’t stop once you stop working either.
Here are four of the most important planning topics we help clients navigate once they have retired.
1. Reassessing goals.
Retirement has a funny way of throwing even the best laid plans for a loop. No matter how prepared you think you are for your last day at work, waking up the next morning with nothing but time on your hands can be jarring. For some folks, the reality of retirement completely changes their preconceptions about what retirement should be like.
Step one: take a breath. You’ve been working towards this moment for decades. Change is scary, but with a little extra planning it can also be liberating.
Once you’ve given yourself some time to adjust, sit down with your spouse to review the big retirement goals you’ve mapped out in the past. You’ll be excited to tackle some of these items. Others might not sound as appealing as they once did. Your life has changed quite a bit since you first started saving and investing. Now that you’re actually retired, you’re free to let go of any goals that no longer apply and focus your attention on things that are going to make your golden years fulfilling.
2. Separating Needs from Wants.
At the other end of the spectrum, some retirees just can’t wait to crack open their nest eggs and start living it up. And that’s good! Transitioning from a “save” mentality to a “reward” mentality is one key to enjoying your retirement.
But before you get too caught up in planning cruises and building a backyard swimming pool, you have to make sure that your basic needs are covered: housing, health care, monthly bills. In other words, you have to draw some distinctions between things you WANT to do and things you NEED to do, and prioritize accordingly.
This can be trickier than it sounds. Having necessary health care coverage for you and your spouse is a clear-cut need. But certain categories can often overlap in surprising and complicated ways.
Take housing for example. If the family homestead is just too big for you and your spouse now that the kids are gone, you may want to downsize. But sentimental attachment to your home and fear of change might keep you from realizing that moving is really a need. As you get older, who’s going to help you with yardwork? How much longer can you put off fixing that leaky roof before it becomes a major expense? Is the cost of staying in your current home going to make it difficult for you to achieve some of your other retirement goals?
3. Budgeting buckets.
These kinds of unique, personal issues are why there’s no one-size-fits all answer to the most common retirement question: “How much money do I need?” Despite what you might read online, you can’t just withdraw 4% in a straight line from your retirement accounts every year and expect to be financially secure into your 80s, 90s, or even 100s.
A sustainable withdrawal and spending strategy starts with lining up your spending buckets. Things on your Needs list take priority. For many seniors, health care is going to top that list, especially if you or your spouse have any ongoing health concerns or prescription drug needs. Medicare does not cover everything, and as you age you could incur some major out-of-pocket expenses for things like in-home nursing or assisted living.
Another major item is an emergency savings bucket. This is the cash you’re going to rely on to get you through the things we can’t plan for: a major market correction, a sudden health crisis, a natural disaster damaging your home.
Further down your list, we encourage clients to take a hard look at more of those items that blur the line between Need and Want. Check your monthly bills for subscriptions and memberships you’re not getting enough use out of. Is it time to sell that extra car or speed boat that never leaves the garage? Reducing spending on items you can control is the single most powerful adjustment you can make to your financial plan.
4. Reviewing estate plans.
Quick reminder that everyone needs to have:
- Last Will and Testament, which outlines your last wishes and explains how you want your estate to be distributed to your heirs and any other beneficiaries.
- Power of Attorney that authorizes someone you trust to act on your behalf while you’re still alive, in the event that you are incapacitated or unable to make decisions.
- Healthcare Directive dictating how you would like to be cared for in the event that you become incapacitated.
- Living Will designating a person to be in charge of making important medical choices on your behalf if you are unable to.
Talk to your spouse about any changes you’d like to make to these documents. If you’re still satisfied with how your estate will be distributed and how each of you want to be cared for, have a conversation about your designated beneficiaries, especially the person you’re giving power of attorney and the responsibility of settling your estate. Don’t just give everything to “the good kid” and trust that person to do “the right thing.” Be specific, be intentional, and if possible, be vocal about your last wishes with your loved ones while you’re still able to do.
Now … Do it all over again!
The happiest retirees we work with at Keen Wealth are curious, experimental, and adventurous. They try new things. The visit new places. They share favorite experiences with their spouses and give each other room to grow as individuals. They plan for things they can plan for and adjust when necessary.
And when life steers them in a new direction, they call us up for help with the financial side of the journey.
If you recently retired, we’d love to hear how this new phase of your life is going. Let’s make an appointment to meet up, review where you are right now, and start planning for where you want to go.
Bill Keen is a CHARTERED RETIREMENT PLANNING COUNSELOR℠ and independent financial advisor with more than 25 years of industry experience. As the founder and CEO of Keen Wealth Advisors, a registered investment advisory firm, he specializes in providing personalized retirement planning designed to help people thrive before and during their retirement years. With a passion for educating others, Bill regularly blogs about retirement planning, hosts the podcast Keen on Retirement, and has contributed to U.S. News and World Report, Reuters, Wall Street Journal’s Market Watch, Yahoo Finance, and other publications. Based in Overland Park, Kansas, Bill and his team work with clients throughout the greater Kansas City area and across the nation. To learn more, connect with him on LinkedIn or visit www.keenwealthadvisors.com.
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