The Retirement Decisions You Only Get to Make Once
Every day in retirement presents a new set of choices.
After all, once you don't need to work, you're in charge!
A full day at the golf course? Absolutely.
A spontaneous weekend getaway with your spouse? Why not?
Grabbing coffee with friends, or sitting at a table solo to enjoy a good book? It's up to you.
And if you don't like how today turns out, you can always make different choices tomorrow.
However, there are some choices in retirement that don't come with easy do-overs.
And the less reversible a decision is, the more important it is to think through all of your options and make the right choice the first time.
Let's look at where some key retirement decisions fall on the reversibility spectrum.
Highly Reversible Decisions
Lifestyle choices are usually easy to make, unmake, and remake -- sometimes as easily as turning the page on your calendar and trying something new.
This is where retirees should feel free to experiment. The financial stakes are usually low. But if you're willing to follow your curiosity and take a few chances, the return on investment can be very high.
Adjusting discretionary spending: Visit new restaurants and local shops. Become a member at local museums, theater companies, or athletic clubs. You can always spend less next month or cancel a membership you don't end up using.
Part-time work: Try taking a shift at your favorite local business, or at a company that couldn't afford to hire you during your prime earning years. If the job feels like a chore, quit.
Volunteering: Giving back can be a great way to add some structure to your week and repurpose your professional skills.
Travel plans: If you decide to splurge on a massive European tour this year, you can balance out your travel budget by sticking closer to home next year.
Modifying an investment allocation: If your risk tolerance has shifted now that you're no longer working, sit down with your advisor and discuss some simple adjustments that could help you feel more confident about your plan.
Partially Reversible Decisions
In most cases, these types of decisions can be undone ... but not without some personal and financial costs.
Make sure you think through all the possibilities, positive and negative, before you:
Buy a vacation home or relocate: If you buy a beachfront condo in Florida and end up hating the humidity, you can always sell it. But add up realtor fees, moving expenses, closing costs, and potential capital gains taxes and changing your mind could cost tens of thousands of dollars.
Provide ongoing support to an adult child: Many seniors find great joy in "living their legacies" by giving loved ones financial gifts while they're still around to see their generosity in action. But if your giving is enabling an adult child's bad habits, turning off the faucet can create family friction for decades.
Buy a Recreational Vehicle: Boats, RVs, sports cars, and motorcycles require storage, maintenance, and insurance. If you decide you'd rather fly than keep a camper in your driveway all year, you won't get those expenses back, even if you manage to break even on a resale.
Difficult-to-Reverse or Impossible-to-Reverse Decisions
Once you make these choices, it's legally, financially, or practically impossible to go back:
Leaving a professional leadership position: You can always find another job, even after you retire. But high-earners who regret stepping out of the C-suite, or former business owners who wish they could undo a sale, probably won’t find an equal position at a different company.
Claiming Social Security: Within your first 12 months of claiming Social Security, you can withdraw (stop) your benefits and repay what you've already claimed -- including spousal benefits and withholdings. Outside of that one-time window, the age at which you claim Social Security locks in your benefits – and survivor benefits for your spouse – for the rest of your life.
Pension elections: Options may vary from plan to plan. But choosing between a "single-life" payout or a "joint-and-survivor" payout is usually irrevocable.
Selling the family home: Moving to a new house or relocating to a new town means saying goodbye to the home and community you've known for decades.
Large charitable gifts: If giving too much today puts your retirement at risk tomorrow, who is going to help you?
Estate Planning: In the event that you pass or become incapacitated, the details of your estate plan are usually set in stone. Worse, if you pass without creating a plan, then the courts will settle your estate.
Questions to Ask Before a Hard-to-Reverse Decision
When you're facing a major retirement decision, step one is always the same.
Slow down.
Before you sign a legal document, claim a benefit, or wire a down payment, ask yourself:
What do we gain by acting now?
What options disappear once we decide?
What happens if our assumptions are wrong?
Can we test the decision in a smaller way first?
Are we deciding from a place of clarity or a false sense of urgency?
Sometimes it's difficult to evaluate these kinds of questions with a clear head, especially when your nest egg is involved.
At Keen Wealth, we pride ourselves on being your trusted decision partner. Come talk to us about the choices you're facing in retirement, and we'll stress test your flexibility, explore alternatives and trade-offs, and ensure that the choices you can't walk back are executed with diligence and precision.
About Bill
Bill Keen is a financial advisor with over 30 years of industry experience. As the founder and CEO of Keen Wealth Advisors, a registered investment advisory firm, he focuses on 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 Forbes, 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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