When it gets real
For many of you (like 9,000+), the life-changing retirement day is coming.
It’s getting real.
You check your 401k balance regularly and occasionally receive an updated Social Security Statement.
You wonder and dream about it.
You ask yourself if you can afford the retirement you want.
You want to know how to prepare your money.
There’s what your friends say retirement is, how your parents did it, what you read on the internet about it, and how it will actually work for you.
Let’s make your retirement and wealth-building story better.
The Precursor – Don’t Wing Your Retirement
Over the years, I’ve worked with many families that wait until late in their careers to get serious about retirement planning.
They almost always say, “We should have done this sooner,” we say, “Sure, but we can’t change the past, only the future. Let’s get you a plan to crush retirement.“
There are many reasons why kicking the can down the road happens, but I want to start with a firm reminder: Don’t let that be you.
This quote sums this up nicely – fail to plan, plan to fail.
Don’t wing it when it comes to retirement planning 🙂
Now, onto the seven retirement tips.
#1 -Retirement is a giant, multi-year process
It’s a process to retire, and once you are retired, it’s a process to get used to retirement and fine-tune your investment and spending strategies.
I recently talked with a client who has been retired for five years and just turned on social security.
I remember the “Should I retire a few years early?” conversations we had, and now, years and years later, the conversation of “Is now the time to pull Social Security?” happened.
Retirement is a process.
Just like your career is/was a process.
Just like raising kids is/was.
It takes time to dial it in.
The day you quit working is when you technically retire, but the planning and refining should start years beforehand.
#2 – It’s weird & hard to retire
People often find a massive amount of self-worth in what they do for a living.
I sure do.
It can be hard to quit your job and go from VP, Director, MD, RN, etc., to a person with time on their hands.
Also, it’s weird to spend your entire career, like 40 years, saying, “We need to add to the investments accounts, then, overnight, you say, “We need to start pulling money out of the accounts.”
The shift from saving your money to spending your money is difficult.
While I love a tight financial plan and specific numbers to offer families (for example, you can spend X dollars per month, given your portfolio), retirement is far from the linear nature of modern financial planning software.
And that is why I like to remind people that retirement is a process and to give yourself some grace to figure it all out.
#3- 100% practice retirement
Practice makes perfect.
Put your paycheck into your investment account, pay yourself a fixed income for six months, and see how you do.
Whatever you want to do in retirement, practice it while you are working.
Why is this so important?
Once you hand in your notice, sell your business, or transition out of your job, it’s almost impossible to get back in.
So make sure you are ready to quit before you quit.
Practice retirement because this next part is tricky.
#4- Overspending early is deadly
I often spend time with clients who are nearing or in retirement. One thing I am particularly interested in is their spending ratios.
If spending is too high early on, it’s a danger sign to me.
Here’s why.
That money is permanently removed from the investment accounts and can no longer be compounded to help pay your 85-year-old self’s bills.
That means raising the risk of running out of money later.
Not good.
Running out of money is the nemesis in retirement planning.
That’s why I mentioned practicing retirement is so important.
#5 – Working longer works great (if you can)
Over the years, I’ve noticed that working in retirement is becoming increasingly common.
While we celebrate breakthroughs in medicine, those breakthroughs make us live longer.
And living longer is expensive. Hence, more people have adopted “retirement careers.”
If you are short on your funding goals or want to improve the math in your plan, work a year, two, or three more.
I won’t go too deep into the math of this, but working a year, two, or three longer than you want usually dramatically improves the overall health of your retirement plan.
If you are nervous, the market crashes, or need to shore up your accounts, working longer is always the best option to enhance your retirement plan quickly.
This strategy works if you have $100k, $1m, or $5m+.
#6 – It never goes to plan
You change, the world changes, your family changes, your car decides to break.
You get it.
Stuff happens.
Look no further than me for an example this week. After just four years, my wife and I’s dryer decided to break and almost set our house on fire.
I guess buying the nice one was a mistake?
But what does that mean?
It never goes to plan.
Health scares, market turmoil, family drama, and aging all show up in strange and unexpected ways.
Taking this fact of it-never-goes-to-plan in stride is critical in the context of your well-thought-out retirement plan.
#7 – Retirement is a decades-long game
You’ve heard it here many times.
The long game is the game to play.
Modern retirements last 20-30 years.
That’s a long time, and how many bad markets will you endure?
Historically, there are bear markets (bad market drops), on average, every four years.
You’ll likely live through 4-6 bear markets where you’ll lose money.
When they happen, not if, remember the long game, commit to great investing decisions, and use time to your advantage.
The Wrap Up
Retirement marks the passing of one large chapter of life and the start of an entirely new adventure.
The last thing I want for you is to be stressed about things you don’t need to be stressed about.
I want you to have a portfolio you are confident in and a retirement plan that is flexible enough to handle the fact that things never go according to plan.
- If you are close to retirement, get the process started now.
- If you are 10-20 years out, note these seven items, lodge them in your memory and keep buying assets.
Let me know your thoughts on this edition.
Was there something new you’ve never heard of?
Does this make you pumped about retirement or not?
Please reply and let me know.
I’ve been inspired by the many adventures our clients at Fjell have taken in retirement.
Retiring isn’t easy, but it’s good.
Stay tired, and don’t wing it.
