What Today’s Happiest Retirees Got Right (and What You Can Learn from Them)
At Keen Wealth, we don't just want seniors to make it to retirement -- we want them to set themselves up to enjoy it! And achieving that all-important goal takes more than just hitting a "number" or buying the perfect beachfront condo.
According to a recent study by Fidelity, 72% of retirees say that their retirement is "going as planned." These seven practical, actionable steps will help you join their ranks when you're ready.
1. Plan early -- and stick with it!
70% of recent retirees in Fidelity's study said that they "saved and planned appropriately" for a comfortable retirement.
Of course, a plan is only as good as your commitment to it. At Keen Wealth, we work with folks to make sure they feel confident in their plan, no matter what's happening in the markets. Specific amounts and allocations might change depending on the facts on the ground. And my team is always on the lookout for advantageous moves, like Roth IRA conversions or "buying low" during downturns. But saving and investing consistently will always be the biggest key to securing a happy retirement.
2. Build predictable income streams.
The markets go up and down. But a pension, Social Security, dedicated savings accounts, and interest and dividends from securities holdings can provide cash that retirees can count on month after month. These sources can be the bedrock of your annual budget, supplemented with a carefully considered withdrawal plan. The clearer you are about how much money you have coming in every month, and how much you can comfortably spend, the better you're going to feel about having a little fun.
3. Use tax-advantaged accounts strategically.
Nearly 60% of Fidelity's respondents said that maximizing employer-match retirement plans was a key to their successful retirement. Many also utilized Roth conversions during down-market years when they knew their taxable income would be lower.
But sequencing how you use these accounts is just as important. If you have a diversified portfolio, with a mix of cash, bonds, brokerage accounts, tax-deferred accounts (traditional 401(k) or IRA), and tax-exempt accounts (Roth IRA), you and your advisor can decide which accounts to tap into first and in what amounts with an eye towards minimizing your lifetime tax liability and earning potential. In many cases, that means letting tax-advantaged accounts continue to grow for as long as possible.
4. Don't underestimate healthcare costs.
In a typical "retirement smile," spending drops early in retirement and then ramps back up in your later years as your health care needs increase.
57% of retirees who didn't plan for healthcare costs told Fidelity that those costs are higher than they expected. Happier retirees were prepared. They accounted for Medicare premiums, as well as potential out-of-pocket expenses and gap plans for things Medicare doesn't cover. Many also invested in tax-free health savings accounts.
5. Maintain flexibility.
There's no such thing as a "perfect financial plan," because no one's life ever moves in a straight line. Accidents happen, markets dip, life goals change. A comprehensive financial plan can adapt and support you during those inevitable ups and downs.
Fidelity found that 92% of Americans – including retirees – understand that financial planning is never a "set it and forget it" process. Your plan will continue to evolve throughout retirement as your life changes and your needs and goals evolve. Keen Wealth’s checklist-driven process involves, at minimum, annual in-person reviews and quarterly “check-in’s” so that we can make sure our plans are keeping pace with what our clients need.
6. Focus on what money can do for you.
The happiest retirees in Fidelity’s study were as financially secure as they were purposeful. They travelled. They tried new activities. They gave back. They supported their friends and families. They invested in continuous learning. They took volunteer positions and part-time jobs that gave them structure and purpose.
While there can be some limits to Maslow’s hierarchy, once we meet our basic needs, we do tend to look higher for things that fulfill us, help us to grow, and help us to learn about and connect with other people. Keen Wealth tries to help retirees see money not as an end, but as a tool for getting what they want from life.
7. Review your retirement plan.
Ask yourself:
Are my income sources predictable and diversified?
What am I prepared to spend on health care?
Have I maximized all tax-advantaged options, including employer-match, Roth IRA deposits, and catch-up contributions?
Am I aiming for a number, or for a lifestyle?
My team at Keen Wealth excels at helping folks on either side of the retirement transition strengthen their answers to these kinds of planning questions. Let’s meet to discuss your plans for a secure, fulfilling, and happy retirement.
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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