The notion of retirement is both alluring and complex. It’s the period in your life when you want to enjoy yourself, in good health, with the resources available to fulfill a variety of life ambitions.
Today, your retirement may extend over several decades, offering incredible opportunities to enjoy, partake, and experience a host of life adventures. However, longer retirement periods also require greater resources, and planning ahead is essential. Here are twelve tips for enjoying a successful and rewarding retirement.
Plan For Longevity
While living to age 100 is still impressive, it’s not nearly as uncommon as it once was. Today’s healthier lifestyles and remarkable medical advancements are helping people to live far longer than prior generations. When you think about your retirement, you need to take into account current life expectancies, but also consider how medical progress in the future will almost certainly extend average mortality ages beyond today’s estimates. You and your assets need to be prepared to live longer, particularly if you’re active, in good health, and have longevity in your family history.
Maintain Purpose
For many of us, work is (or was) a significant part of our self-identity and purpose in life. Retirement can be rewarding, but it can also be a significant mental adjustment in terms of the role you play in society, and your sense of self-worth. Whether you elect to continue working part-time, take more time to be with family, volunteer, join social groups, or partake in other activities, it’s important to remain engaged with life, to maintain your sense of self and fulfillment.
Factor In Resources For Fun
One of the most common myths about retirement is that you’ll spend less after you stop working. The reality is that you have more time on your hands – and more time on your hands means more opportunities to spend money. If enjoying your retirement includes activities like travel and entertainment, be sure to think about related expenditures and factor them into your retirement budget.
Partake Early
While statistics indicate that people are living longer, the truth is that you simply don’t know your life expectancy or the health that you’ll enjoy in the future. It’s wise to allocate the activities that are most important to you and those that require greater exertion to earlier in your retirement. This helps to ensure that you won’t look back with regrets should circumstances change.
Stay Out Of Debt
Debt can be a problem at any stage in life, but it’s particularly difficult to combat post-retirement, when your pensions, Social Security, and assets are more fixed. The best plan is to pay for things as you go, and to set aside income and assets for large expenses. Pay off your credit cards in full every month and forego thinking about your home equity line as a way to finance projects.
Plan For Unexpected And Large Purchases
It’s a common mentality as you transition into retirement to try to prepare for every imaginable large expense that may occur in the future. From buying a new car to putting on a new roof, many people virtually go on a spending binge as retirement nears. While this might help avert some expenses down the road, you’ll still encounter others over a period of decades, particularly unexpected expenses that will inevitably occur. Make sure to have a buffer in your planning to account for large and/or unforeseen expenses throughout retirement.
Have Adequate Preservation Assets
For many individuals, retirement entails preparing your assets to replace a portion of your paycheck. This means that you need security and liquidity, to ensure that you get paid, regardless of market performance. Consider holding at least five to ten years of cash needs in preservation assets (namely cash and high-quality bonds) to ensure that you can ride out a market downturn with the ability to pay your bills and hopefully buy in a little on the dips.
Remain A Disciplined Long-Term Investor
Most individuals need growth in their assets to sustain their retirement objectives over a period of decades. Stock investments are the most common element for achieving investment growth. It’s important not to chase returns or over-react to market events. The markets are cyclical. This means both upturns and downturns will occur. Study after study shows that long-term disciplined investors win for staying invested and allowing their assets to recover. As noted above, having preservation assets allows you to sustain your needs during difficult market segments: Stay focused on your retirement goals, and stay disciplined as an investor.
Evaluate ‘What-If’ Scenarios
Part of being prepared for retirement is realizing that life is a winding journey. While you can’t predict every twist and turn, you can certainly look at a few ‘what-if’ scenarios to evaluate your personal and financial security. This might include variations in spending, differing rates of return, re-locating, care needs, and so on. Looking at possible outcomes in the future helps you to frame your financial decisions today, ensuring you are best prepared for tomorrow.
Get Long Term Care (LTC) Insurance
One of the largest risks in retirement is the possibility of requiring ongoing care due to physical or cognitive limitations. While you obviously hope you’ll never need care, if you do, it can play havoc with your retirement finances – especially when there’s a healthy spouse. Care costs have been escalating at a rapid pace, making annual care costs exorbitantly expensive for most individuals. Long term care insurance is often the best solution to funding possible care costs, allowing you to approach retirement with a greater sense of confidence.
Communicate With Your Spouse Or Partner
If you’re in a relationship, it’s critical to communicate about finances with your spouse or partner, no matter what your stage of life. Collaboration and joint participation in financial decisions is fundamental to a healthy financial relationship. Be sure to discuss your life goals, your resources, and what you expect out of retirement. This ensures that you’re both working towards the same objectives but, more importantly, positions either party to take over the finances in the future if necessary.
Communicate With Family Members And Agents
It’s also important to communicate with other family members, especially those named in your planning documents and those who might become engaged in your financial matters and/or care needs at some point in the future. Talk with them about the roles they might play, what they can expect, the resources available, any planning that’s in place and where to source critical information should an illness or death occur. Doing so helps to ensure that your wishes will be honored, and can provide peace of mind for you and your loved ones. It’s far easier to have proactive and productive discussions than reactive, emotional responses.
SageVest Wealth Management actively works with you to evaluate every aspect of your retirement planning considerations from preparing for the transition to enjoying a fulfilling future. We’re happy to speak with you about your personal objectives and how we can help you make smart decisions, designed to help you reach your goals. Please contact us for more information.
