Typically, when you are planning for your next vacation, you are most likely thinking about where it is you want to visit, how you will get there and once you are there, what activities you will participate in.
Once you know those details, you can then determine how much money you will need to make this vacation a reality.
What happens when you are planning the most important and longest vacation of your life; your retirement? Most of us do not put as much thought into our retirement as we do a vacation. Many of us are getting it wrong when it comes to retirement income spending.
Yes, we do think about how to save money, where to invest our money and how to lower our tax burden. Yet most of us only have a vague idea of how we want to spend our free time or whether our health will allow us to do what we planned on.
Don’t get me wrong, you need money in order to retire. Yet most of us do not focus enough attention on the activities that we will be participating in.
Planning for your retirement
Planning your activities with timing in mind is essential for making the most of your money and your life, now and into your retirement years. If you don’t think about your future activities, how can you possibly know how much money you need to save?
You will either save too little or you will not spend enough of your money while retired and shortchange yourself during your retirement years. This is why it is so important to calculate your retirement income spending.
Saving for too long, not spending enough or delaying gratification so that there is no gratification during your retirement, is a terrible way to live.
Federal Reserve Board data shows that US households’ median net worth peaks when the head of the household is between the age of 65 and 74. This can translate into too many people dying before they get to spend all the money they have accumulated.
These big savers will be rich in dollars but poor in what the dollars are there for, acquiring positive life experiences.
Your retirement and the unknowns
I realize that people focus more on the money as opposed to the activities when they plan for retirement. The future holds so many unknowns; how long will you live, how long will your health hold out? Saving for these unknowns is prudent.
With that said, there is a portion of the population that actually saves more than they need to. This can be seen in the data from late-in-life net worth numbers. When people die without having used all their savings (if using all of their savings was the goal), the remainder often goes to heirs.
What causes people to save more than the actually need? I believe it is to protect against unforeseen events. In some instances, insurance of some sort can be used to protect yourself from such events.
What/who are you saving your money for?
Some want to save money to pass on to heirs or leave a legacy of some sort. I have no problem with that goal, but how about gifting your money or some of it while you are still alive? That way, you can monitor how much you are giving and how much you can spend on yourself to enjoy your retirement as you planned.
Your retirement is also impacted by your health status. As we get older, muscle strength and your cardi-vascular condition will decline. Doesn’t it make sense to do what you always wanted to do while in retirement, earlier rather than later?
Conclusion:
When you stop to think about what you will be doing while in retirement, you might just realize that you will need less money than you originally thought.
What if you told a retirement planner that your goal in retirement was to maximize your enjoyment rather than blindly growing your nest egg, how do you think that might play out?
At Retirement Solutions, we have been working with women for over 40 years helping them identify not only their retirement goals, but just as important, their values. When you match your money to your values, you will find that your life is more complete and more satisfying.
Anybody can spend money, but when you spend your money in concert with your most cherished values, you will find that you will attain a higher level of fulfillment.
Should you wish to discuss your situation with us, we invite you to click the “Schedule a Consultation” link found in the upper right corner of this page. There is no obligation nor cost to this 15 minute call or if you wish, a Zoom meeting. We promise!