You’ve made it to the ‘finish line’. You’re financially independent and retirement beckons. You’ve diligently saved for decades, and now retirement is no longer a fantasy - it’s as real as it gets.
Now, instead of adding to your savings, you enter the phase of your life where you begin withdrawing from your savings. You keep telling yourself you have enough money saved up to live the retirement lifestyle you imagined.
According to the AARP, 10,000 baby boomers are turning 65 every single day, and this is expected to continue into the 2030s. This means that nearly seven baby boomers are turning 65 every minute.”
If you’re a few years away from retirement, the day will soon come, when after a lifetime of squirreling away money and delaying gratification, the ‘distribution phase’ of your financial life will begin.
For years I’ve witnessed how we give too much of our power away when we visit our Doctor’s office. Instead of asking why they recommend we do x or y, we blithely follow whatever recommendation is made. After all, they’re the one with MD next to their name, so who are we to question their instructions?
The dictionary would define 'legacy' as:
a gift or a bequest that is handed down, endowed or conveyed from one person to another. It is something descendible one comes into possession of that is transmitted, inherited or received from a predecessor.
A financial planner would define legacy simply as:
"the amount of inheritance you plan to leave to your heirs and or charities/organizations upon your passing.
As you transition from work to retirement, you should be prepared for the inevitable emotional roller coaster ride you’re about to go on.
Year after year, client upon client all report that their first year of retirement, from an emotional point of view, is the most difficult year of all. What may surprise you is that the emotional challenges occur regardless of your net-worth.
Imagine, that after 40+ years of working and being accustomed to receiving a bi-weekly or monthly paycheck, suddenly, there are no more paychecks coming your way.
One of the main reasons people fail at retirement is they give too much money to their children.
Let’s say you’re in your 60’s when you retire or even early 70’s. At this time in your life, your children are adults, yet they’re still hitting up Mom & Dad for cash. What’s up with that? And how can or more likely, will that impact your financial security? Although every parent wants to see their children succeed, giving too much money away can cause a severe drain on a couples retirement resources and jeopardize their own financial security.
Let’s call this blog my annual financial planning public service announcement for those two years or less away from retirement.
At the end of the day, a financially successful retirement requires an honest assessment of where you are today, financially speaking. Although that sounds like a pretty obvious task to undertake, herein lies the problem.
There are some big changes happening in the world of retirement planning. Some big and really good changes. First some background.
One of the most studied and researched topics in the field of financial planning is NOT the study of the accumulation phase of your life, where you’re saving and investing for the future. Instead, the subject that draws the most attention in the academic as well as professional world of personal finance, by a longshot, is that of the withdrawal phase of your life. The phase where you begin to distribute the money you’ve saved either with a planned retirement income strategy or a flying by the seat of your pants strategy.
Last week, a good friend asked me if I would look over the retirement plan his financial planner had just completed. Let’s call my friend, Steve.
And for the record, if I may digress, I’ve discovered the hard way that maintaining and keeping long-term friendships intact when your occupation is financial advisor, means making sure your friends understand why recommending they work with an independent advisor who is not their friend, yet puts their best interests first. Sounds easy, yes? Not so much. On to Steve’s story...
According to Pew Research, every day for the next 14 years, 10,000 baby boomers will reach age 65. Think about that for a second, that’s a lot of people. And whether they plan to retire at age 65 or in a few years, preparing for retirement is now front and center in their lives.