Wealth Management & Financial Planning

Wealth Management & Financial Planning

Olympian Practice for Retirement Gold

Many of us grew up hearing familiar advice from parents or coaches: “Practice makes perfect,” or “Better to be prepared.” These phrases, while sometimes mocked in our youth, have proven their worth over time. As adults, we often pass this same wisdom down to our children. This concept of practice is not only crucial in our early years but also plays a vital role in preparing for retirement, much like it does for Olympians preparing for the Games.

Practicing for retirement offers numerous benefits, particularly in addressing the emotional challenges of leaving a career. It helps alleviate some of the uncertainties that accompany this significant life transition. Retirement marks the end of a professional life but also opens the door to new opportunities. Many of the families we work with expect to fill their days with grandchildren, hobbies, travel, or volunteer work—and they are right. Often, retirees wonder how they ever found the time to work, given their now busy schedules!

Drawing parallels with how Olympians train can provide valuable insights. Olympians follow rigorous training regimens, often dedicating years to perfecting their skills. They simulate competition conditions to prepare mentally and physically for the actual event. This meticulous preparation helps them perform under pressure and achieve their goals. Similarly, practicing for retirement involves simulating post-retirement financial conditions to ensure a smooth transition.

One of the key advantages of practicing for retirement is gaining clarity on your standard of living. This includes understanding both your fixed and social expenses. A common question we hear is, “Do I have enough to retire?” While families often seek reassurance about their assets and pensions, the first step is determining how much they need each month, after taxes, to maintain their lifestyle. For example, if a family needs $3,000 per month, their required nest egg is significantly different from a family needing $10,000 per month.

Practicing for retirement is straightforward. Spend the year before retirement managing your fixed and social expenses as if you were already retired. If you believe you need $5,000 per month to live comfortably, limit your spending to that amount, and save the rest. This approach not only clarifies whether that figure is realistic but also helps you save more and prepare for unforeseen expenses. Practicing for the unknown can mitigate the emotional toll when unexpected events occur.

This method is akin to an Olympian’s training cycle, where each phase builds on the previous one, adding layers of preparedness. By practicing, retirees can identify potential pitfalls and adjust their strategies accordingly, much like athletes tweak their techniques based on training results.

This added clarity often provides our clients with newfound confidence and perspective. We aim to prevent the uncertainty many families face when they first consult with us, unsure if their assets will suffice in retirement. By taking proactive steps and practicing, you can reduce anxiety and ensure a smoother transition into retirement.

Remember, a successful retirement requires financial preparation. Leaving a career is not just an end but a beginning of a new chapter. The best beginnings are those that start with a well-thought-out plan.

Financial Enhancement Group is an SEC Registered Investment Advisor.

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