In my previous blog, I used our common airline flight experience as a retirement readiness analogy. In the last fifteen minutes before landing, the flight attendant will make an announcement describing a number of key tasks that need to be done to ready the plane for landing and we can liken this to the five years (give or take) prior to retirement. I outlined five high priority preretirement tasks. In this article lets focus on the first: Visualizing retirement in detail.
During our early career years, we can prepare for retirement readiness, but often our notion of retirement is understandably vague. With so many elements of our future life yet unknown, it’s reasonable to simply save and invest a percentage of our salary for our future. If we do attempt to calculate our retirement needs, most calculators will assume a broad retirement income objective such as 70% of our current income.
But in the preretirement period, we can and should narrow the focus and become finite in how we want to live our retirement years. This is the time to map out our expectations in detail; firstly, to be intentional about the quality of our future and secondly, to make sure that our financial resources will support our expectations.
Before beginning the process, try to eliminate the stereotypes of retirement; there are no right or wrong approaches. You may find that a transition to total non-employment is not a healthy or desirable state for you. Be open to a gradual transition, or, if you love your job and your current lifestyle, resist the notion that retirement is a date or an age.
Also, this process may be more complicated than it appears and it’s common to discover conflicting objectives which will need some sorting out. A warm weather relocation seems like such a good idea until we become grandparents and our grandkids are in Buffalo, or Idaho, or Boston, or all of the above. We may also face challenges in terms of our health or the needs of aging parents. Lastly, consider the bucket list goals that you have yet to experience with the realization that our early retirement years are different than the latter ones.
This exercise may take some time, but once we have mapped out our intentions, we can do the math and calculate how much our intended lifestyle will cost and how our resources will match up. It’s important to avoid two opposite and unacceptable outcomes. In one outcome we spend too much and run out of money. In the other extreme, not having done the math and not being aware of the income that is safely sustainable, we exist in a state of needless financial anxiety afraid to live the life we desired. So in quiet moments with your own thoughts, or the thoughts of those closest to you, consider the following check list:
Quality of Life – Practical limitations:
- Your health.
- Location: Your family and support system- who do I need and who needs me?
- Dwelling decisions – downsizing and any physical limitations.
Quality of Life- The life I want to experience:
- Bucket list experiences.
- Location/relocation/vacation property.
- Activities and hobbies.
- Second career or charitable vocation.
- Continuing education.
Quality of Life- To work or not to work?
- Caution: Transition from occupation may be challenging and sometimes brings a sense of loss- identity, worth, or purpose.
- Boredom – Pandemic may have been helpful in gaining a perspective on this.
- You possess valuable knowledge, skills, and experience very much in demand.
- Is there a sweet spot between total leisure and your current work environment?
- Reduced hours?
- New directions?
As you can see, good financial planning is more than numbers. At Level Financial Advisors, helping our clients visualize the retirement they want to live and understanding their future dreams and intentions is fundamental to our process. If you would like to begin a discussion of your pre-retirement preparations, feel free to call us at 716-634-6113 or visit us online to schedule a free consultation.
Win Jacob, CFP®
Senior Financial Advisor