In a perfect world, planning for retirement should be exciting (I can’t wait to retire early!), easy (automatic savings/contributions) and not stressful (I have so much money to save!)
In reality, thinking about retirement can make people feel very anxious. How much should I be saving? Will I have enough to live? Will I run out of money? Planning for the future can be very overwhelming and it can be difficult to picture how saving into an investment portfolio can actually provide an income for you when you are no longer working.
Many times, people don’t realize the importance of starting to save early on. The earlier you begin to save money for retirement, the more successful you will be. You will have saved more dollars, and you are giving it a longer time to grow and earn interest.
As we get older, the idea of no longer earning an income and receiving a paycheck is hard to comprehend. We’ve seen a lot of our clients fearful of making a mistake as they near retirement and they become very fearful of market declines. As you approach retirement, it is so important to discuss any concerns that arise with your trusted advisor.
As financial planners, we hope our clients can achieve a peaceful transition into retirement. Here are a few suggestions:
GET ORGANIZED
It’s not uncommon for individuals to have an assortment of retirement accounts, including 401(k)s and IRAs, along with other investments, banking relationships, insurance policies and more. While people are working, saving and building wealth during their careers, it’s easy to collect different accounts that often have overlapping objectives. Moreover, these folks are often too busy to keep all of these different accounts organized.
This disorganization can be unsettling, especially as retirement nears. You may look at your accounts, never realizing that the small balances held at each institution can amount to a large sum of money! Make sure you are looking at the bigger picture.
If you feel you’re disorganized when it comes to all of your retirement and investment accounts, know that you’re not alone. This is one of the first concerns we usually address when we welcome new clients to our firm.
In helping clients get their finances organized, we consolidate their information, often rolling everything into one or two accounts. Many times, the first major steps in getting organized are identifying how much it costs to live each month (ballpark), and the value of the overall portfolio. If you can concentrate on those two items, you are off to a good start!
CHECK IN OFTEN
We recommend checking at least once a year to review your retirement plan. Your doctor recommends annual physicals to help you maintain health and well-being and adjust your lifestyle if necessary. Doing the same with your retirement plan can have a similar effect on your financial well-being.
As you get older and the idea of retiring becomes more real, you may find yourself thinking more about your financial future, and the amount of income you need each month. You may wonder if your financial well-being is healthy enough for a long retirement. While it can be worrisome, the more you look ahead and talk about your finances with your spouse and trusted professionals, the better your financial situation will be in the long run.
When we work with clients who are approaching retirement, we revisit their retirement forecast more often than once per year and measure the progress they’ve made. Increasing the frequency of account reviews helps to ensure we are monitoring every little change that might take place in our client’s lives. Talking often about your money helps to relieve many of the concerns you may be feeling. Regular check-ins give us the opportunity to make small adjustments when necessary, alleviating the need to overhaul an entire plan.
BE HONEST WITH YOUR EXPECTATIONS.
When working with clients, we encourage them to think beyond numbers when setting expectations for retirement. More than financial security, what do they really want their retirement to look like? We ask them to think about the choices they have in front of them—what goals are most valuable; what do they feel can they can really live without. Set priorities and figure out ways to achieve the higher priority items first.
One common thread that emerges from our client discussions in retirement is a desire for freedom to spend their time as they please. Many come to realize they value time more than money. We help them create a plan for building and withdrawing retirement assets that maximizes the value of their time. Quite often, people discover they may not need as much money as they thought to make the most of their time. This discovery can be as liberating as it is stress relieving.
A PARTNER IN PEACE OF MIND.
Above all else, working with a skilled financial advisor is key to finding peace of mind when planning for retirement. An advisor can bring knowledge and experience to help you find solutions to specific financial challenges you face. Having someone else solve an intractable problem on your behalf can relieve much of the stress that comes with the complexity of retirement planning.
There’s also the benefit of being able to spread the stress of retirement planning around to another person. It can be liberating to have a third-party advisor lift some of the burden off of your shoulders. Finding another person who understands the fears and anxieties you face can give you the freedom to take the first steps in planning for your future.
When Franklin Roosevelt said, “The only thing we have to fear is fear itself,” he understood that fear holds people back from seeking success and improving their lives. The fear of making financial mistakes can keep you from planning ahead for your future. A skilled financial advisor can provide qualified guidance that gives you the confidence to move forward.
