I just signed up for a free class at the community college to learn about Medicare. It can only mean one thing: I’m getting closer to “that age.” Time to get serious about how I’m going to live in retirement. Not that I’m planning to retire as soon as I hit 65. After all, I’ve already reached a satisfying balance of paid work, volunteerism, creativity, and leisure that gives me a lot of flexibility. But at some point I’ll be ready for full freedom, and that means relying on retirement savings as my primary support.
I’ve already done the thing a lot of people my age do. I plugged numbers into an online calculator to see how long my assets will last. I’ve played with the variables – life expectancy, inflation rate, return on investment – the outlook is pretty good. But the model can only do so much. It knows nothing about the real me. It doesn’t have a way to factor in my goals and values – and it has no idea how I plan to live my retirement.
A plan for self-sufficiency
We spend all our adult lives earning money, managing our careers, and squirreling away whatever we can for retirement. We hope everything we saved will last, maybe with something left over for the kids. With careful planning, we can do more than hope.
I once joked that I had figured out the key to a financially secure retirement: Keep working forever. There are some people who truly are that passionate about their work. The rest of us deserve some time off after decades of toil. If you consider that your retirement could last 25 to 40 years, you’ll want to go into it with a plan for managing your assets – a plan unique to your circumstances. Before you get started, here are some things to consider:
Know your lifestyle. A retirement filled with luxury travel will have a different budget compared to one spent closer to home. That is, unless you’re a homebody with very expensive hobbies. The point is, there’s no “typical” retirement – your plan should be built around you.
Define your objectives. You’ll start with a plan to ensure self-sufficiency for the rest of your life. You may have other objectives, too, like passing on generational wealth or contributing to favorite charities. That should all be part of the formula, not just an accidental outcome.
Expect the unexpected. You’ve lived long enough to know that life isn’t without its bumps. You’ll need to have resources available for emergency expenditures or health issues. This is key to self-sufficiency in retirement, allowing you to live comfortably without worry.
Factor in your obligations. Many people go into retirement with financial obligations like outstanding loans or support for a child with special needs. These expenses should be considered as part of your ongoing financial plan.
Talk about tradeoffs. If your budget looks tight once you’ve taken all these considerations into account, you can look at ways to change your financial picture and bring it into balance. For example, you could decide to downsize your house in order to have more money to invest. Or, you may trim your travel budget when you need to take care of home renovations. A realistic financial plan helps you identify different options for balancing your budget.
Creating a financial plan for your retirement years will help you reduce stress and enjoy what you’ve worked so hard for all those years. It can give you the confidence to live the life you dreamed without feeling pinched or having to ask others for financial assistance. Your Arrivity financial planner will show you ways to manage your assets in retirement with realistic budgeting, forecasting, and withdrawal strategies. Read on to learn how they use the PERMA model, developed by Dr. Martin Seligman, to guide you.
PERMA is a financial planning model that focuses on five elements of well-being that can help guide your transition into retirement:
- Positive emotions: Your financial planner is there to reassure you in times of uncertainty, providing positive support and actionable solutions.
- Engagement: A solid financial plan gives you confidence to pursue a new hobby, business, or part-time job.
- Relationships: Time is a budget item, too. Retirement planning can give you more time to relax with family and create stronger bonds with friends.
- Meaning: Retirement opens new avenues for purposeful living, like creativity, volunteer work, and philanthropy.
- Accomplishment: Setting financial goals can help you achieve your ambitions or check items off your bucket list.
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Please contact us at 206.217.2583 or info@arrivity.com if we can assist you or someone you know with financial planning.
Liz is a Late Boomer in the sandwich generation who started an independent writing and brand consulting practice after years as a senior marketing executive. She lives in Seattle, Washington. Her mother lives nearby and her daughter is a recent college graduate.
The foregoing content reflects the opinions or perspective of Liz Behlke and/or Arrivity financial planners and is subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. Past performance may not be indicative of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns Securities investing involves risk, including the potential for loss of principal. There is no assurance that any investment plan or strategy will be successful. Arrivity does not give tax or legal advice. Tax and/or legal strategies should be discussed with a professional before implementing.