Retirement is a nebulous word that means different things to different people. For some, it means leaving the workforce permanently to relax at home. For others, it means spending time doing the activities they haven’t had time to do during their working years, such as traveling, exercising, volunteering, or learning to play the guitar. The list of activities is endless and unique to each individual who is approaching, or has already made the transition into, their retirement years.
How should you prepare for the next chapter in your life?
Most people will meticulously plan out their five-thousand-dollar, week-long family trip to Disney World, but haphazardly plan for their retirement that will hopefully span decades and likely add up to hundreds of thousands, if not millions, of dollars. Why? Mainly because it is easy to get caught up in the everyday busyness of life and procrastinate planning for a goal that is so far away (or it may just seem overwhelming).
Before making financial projections or creating a financial plan, it is necessary to envision what your retirement days will look or feel like. Does that vision include traveling to new places? Perhaps living near or having a second home close to your children or other family members? Or picking up a new, possibly expensive, hobby? The point is that in order to plan for any goal, you need to know what that goal looks and feels like. Sure, your lifestyle will change, your plan will evolve, and you will adapt, but before you start planning for the future, you need to know where you are going.
What should you consider when planning for retirement?
We believe there are two components to effectively plan for your retirement: financial planning and lifestyle planning. And only by marrying these two components can you have a fulfilling retirement. With close to three decades of experience, we have met with many people who do a great job with the financial part but struggle with the lifestyle part. You see, you could have millions of dollars saved, but if you don’t know what you want to do or are too conservative about spending the nest egg you worked so hard to build, you may not enjoy your retirement to its fullest. Having both your “financial portfolio” and “life portfolio” may allow you to achieve true happiness in retirement and focus on what really matters to you.
How important is it to plan out your “life portfolio”?
Surprisingly, one recent study1 indicates the retirement “life portfolio” is often the most overlooked component. It found that 74% of pre-retirees have made a serious effort to plan for the financial aspects of retirement, but only 35% have made a serious effort to plan for the emotional aspects.
The retirement planning process should start with your “life portfolio” goals. From there you can prioritize what actions need to be taken if there are any corresponding gaps in your financial planning. In other words, while you can simply save a random percentage of your income and hope everything works out, a better strategy is to have a vision for your future to save and invest with purpose.
In summary, success means different things to different people, and a holistic approach to retirement planning, starting with your “life portfolio,” may help you determine what your retirement success looks like. Working with your family, friends, and a financial advisor to determine the congruency of both your financial and lifestyle retirement plan could be essential to achieving retirement bliss.
Gary Williams, CFP®, CRPC®, AIF® and Nicholas Ibello, CFP®, AIF® are Wealth Managers with Williams Asset Management. Williams Asset Management is located at 8850 Columbia 100 Parkway, Suite 204, Columbia, MD 21045. They offer advisory services as Investment Adviser Representatives of Commonwealth Financial Network®, a Registered Investment Adviser. Fixed insurance products and services offered by Williams Asset Management. For additional information about the services of Williams Asset Management, please call (410) 740-0220 or email at Info@WilliamsAsset.com. © Williams Asset Management. For more information about Williams Asset Management, please visit http://www.williamsassetmanagement.com/.
1Retiree Insights 2018 Survey of Consumers Ages 50-59. Greenwald & Associates/The Diversified Services Group.
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