You have been financially preparing for years to separate from the workforce. Now the time has come, and you’re likely experiencing emotions that are not financially driven. Our identity is often found in our careers. Habits have been formed around getting up, getting ready and driving to work. No different than the changes created by the pandemic, leaving your job does leave holes.
“Holes” in our life lead to emotional responses that creep in like a fog over a lake. Issues once clear can become cloudy. The most prevalent self-doubt at retirement is regularly, “Do I really have enough?” and “what if” scenarios. Rest assured, things will occur in your life that you didn’t expect – for better and worse. The issues have nothing to do with accepting retirement as a reality. They would have occurred regardless.
“How much will it take to maintain your standard of living when you no longer work?” That is the key topic for you to discern. What do you do today that will cease, and what will you begin tomorrow? You may or may not have a monthly or annual budget established, but you likely have a sense of what “living” cost you today. The key to a content retirement is maintaining your current scenario. Oddly, contentment doesn’t come from massive events like sailing around the world. Nor will it ever come from restricting things you do today that you love and emotionally rely upon. Status quo is the central objective. Anything more is icing on the cake.
Budget is a dirty word for some and emotionally difficult for others. Being ready for retirement is not for the weak! You will need to create a budget in order to address, “Do we really have enough?” Financially, retirement is about managing distribution – the inverse of years of preparation. The process is emotional, and for some, unbearable. People frequently go without the retirement they have earned purely out of duress to take withdrawals. If you fail to prepare adequately, the fear is justified. Likely, if you are reading this, you deserve the retirement your discipline has afforded you.
A retirement budget consists of two categories: your fixed expenses that will not change as you age, and social expenditures that will flatline or decrease over time. Acknowledging the difference is essential for determining how to apply inflation adjustments in your budget. The last 35 years of my professional career have illustrated the importance of both the budget and proper categorization.
As an example, consider a golf membership. For some, this may be a passing fancy, and you may leave the club at 70-75 years of age. Many do just that, and this would be a social expenditure. For others who have been a member of a club for years and could never imagine leaving, it is a fixed expense, and inflation needs to be applied accordingly.
You deserve the retirement you earned. You only get one shot at this. Be proud. Be excited. Embrace it but be retirement ready!
Financial Enhancement Group is an SEC Registered Investment Advisor. Securities offered through World Equity Group, Inc. Member FINRA/SIPC. Advisory services can be provided by Financial Enhancement Group (FEG) or World Equity Group. FEG and World Equity Group are separately owned and operated.