“Managing the Initial Years of Retirement”

The conventional view of retirement is changing.  Certainly, the age at which we retire, what we do during retirement years, and even how long retirement generally lasts look different than assumptions we made 15 years ago.  That being said, the average retirement age is still a conventional 62 years old and 64% of Americans actually leave the workplace between the ages of 55 and 64.  So, assuming we fall into the more conventional age and approach to retirement, what can we be doing ahead of time and in the initial years of retirement to be set up for success?  What areas, both financially and personally, can we be focused on to maximize our retirement years?

Dream and Plan about what Retirement Could Look like

There is a tendency to focus on the destination of retirement rather than looking beyond the day we finally leave standard employment.  It’s understandable because we get focused on an age or a date, work hard at our jobs, and tell ourselves that we will think about retirement once we get there.  While financially you can still have a “successful” retirement this way, it may cause the personal (day to day) side of our retirement lives to be left wanting.  I love the four-step process that Chris Hogan has about how to visualize retirement goals.  He simply says:

• Create a Vision Board
• Chart Your Progress
• Picture it.
• Write Your Story

Whether retirement is in your future or you are already “there”, I think the above steps can be a great way to put purpose and action to your retirement years.

Give Yourself Permission to Spend!

Having your brain switch gears from saving money for retirement to then spending money in retirement can certainly be difficult.  While not spending is a better problem to have than spending too much, it can still lead to frustration for retirees.  We certainly don’t want spending to feel like an obligation in retirement, and one way to help this is to spend money on experiences rather than things.  Maybe it is that trip that you’ve always talked about going on.  Or, maybe it is dinners, entertainment or time with family and friends that fosters feelings of gratitude (post COVID of course!).   

Perhaps there are others less fortunate than yourself and a portion of your spending can be directed to causes or individuals you care about.  Whatever it is for you, giving yourself permission to spend and enjoy your retirement years is a great goal within itself.  Completing the first step of dreaming and writing down your retirement goals can also help to bring to life where to focus your spending.

Plan Where Your Income Will Come From

Many people have saved up their retirement assets inside of a workplace 401K plan and enter retirement thinking they will tap into those funds when they need to.  For some people this can work, but we recommend having a more detailed and structured plan about how you will generate your income in retirement years.  Some different areas to consider:

• What Social Security Benefits am I eligible for? Will I take Social Security at age 62, or will I wait until later?  What makes the most sense?
  • Visiting https://www.ssa.gov/myaccount/ and creating an account to find this answer is a great first step!
• Am I eligible for any pension benefits? If so, will I take a lump sum option or the annuity option?  How much are my benefits affected based on my retirement age?
• How much can I pull from my 401K or IRA accounts?
  • What age can I start and what age am I required to take distributions?
• What non-retirement savings do I have, and how do I optimize taxes on these funds?

This certainly is not an exhaustive list of areas that we can manage in retirement, but it does provide a starting point and hopefully sparks a conversation for your situation.  Nearly 10,000 baby boomers are retiring EVERY DAY!  It’s an incredible statistic, and one that is forecasted to go on until we reach 2030.  That means nearly 300,000 people are retiring every month and entering this new phase of life with questions and concerns about how to make the most of it.  Please share this email with them and help to spread the word on a few tips that can hopefully help them maximize their retirement years.