Retirement is a Big Transition, so Plan Accordingly
| Paul Fain, CFP®
It is one of life’s biggest transitions, retirement. The pandemic has scrambled the retirement plans of many people, accelerating retirement for some, delaying it for others.
In any event, the topic should raise many quantitative and qualitative questions seeking answers: What is your time frame for retirement? Are you financially independent of earned income? What are your spending plans? And more.
In my experience, the most common mistake that new retirees make is under-estimating their living expenses. In particular, retirees often under-budget for spending on family support, travel, and home renovation.
What about your investment strategy? Should it evolve at retirement? How much stock market exposure is too much or too little? Growth investing is still very relevant for a retirement that might span 30 years.
My church recently sponsored a program for people transitioning into retirement. The speaker was Dr. Amy Hansard, author of “Baby Boomers and Beyond.”
According to Dr. Hansard, the No. 1 health fear of new retirees is not cancer or a heart attack, but it is Alzheimer’s disease. So, what is your plan for aging? For most of us, the reality of aging will be diminished capacity of vision, hearing, and physical strength, if not also cognitive decline. How will your financial plan address potential long-term care needs? Where will you live? Who will care for you? How much care can you afford?
A pre-retirement inventory of insurance needs and planning is critical: medical, life, long-term care, and liability coverages require careful attention.
Dr. Hansard says that the retirement years also bring changes to our roles and relationships. For instance, today’s Baby Boomer retirees are sandwiched between the needs of aging parents and adult children. In a sense, who has time to work when Grandma needs a ride to the cardiologist and Junior is living at home during his job search? (Perhaps Junior can drive Grandma to the doctor’s office.)
What about purpose and meaning? Retirement creates an opportunity for people to combine more discretionary time with their experiences and resources to make a difference in new ways. With intentionality, how can you do things that matter relationally or in the community? (Examples: mentoring, volunteering, giving.)
What about legacy? Tell your story! Write it down. Make videos. Share the family history with your heirs, they want to know where they come from. Share your values, pass them down as wisdom lessons gained through a lifetime of experiences. As Proverbs describes, “gray hair is a crown of splendor.” Wear it with pride and purpose (or as in my case, wear it with diminished follicular capacity).
Do you have questions about financial planning or investing? Send your questions to our Knoxville certified financial planners!
This article was originally published in the Knox News Sentinel on May 21, 2021