As a young adult, retirement seemed like the Superbowl of life. Once you made it, you were home free, and it was all peaches and cream from there on out. Since then, I see it a little differently.
For many, retirement is challenging. Their daily routine is upended, spending and budgets constrained, social opportunities minimized. Work provides all those things with minimal effort and when it’s gone, it can feel like a loss or like you’re adrift.
Of course, there are new (and often better) opportunities to be forged. New hobbies, new social plans, new routines. Once a retiree finds their place in the retirement world and they settle into their new and improved lifestyle, they often realize that they have one big daunting question:
It’s a nagging question that won’t go away. It keeps many people up at night with worry and even after you put it to bed, it creeps its way back in. I don’t want that for you so here are some ways to find peace of mind. After all, these are the golden years of adulthood.
#1 Have a Retirement Plan
No matter what age you are (the younger the better of course), I recommend getting an educated assessment of your current wealth situation. Be ready if this is your first time, it’s usually an eye-opener! Whether you get the news you want or not, you’ll walk away with a good understanding of where you are and where you’re going.
Try Out Our Retirement Calculator
Have you heard the saying “the hardest part is getting started?” Every day you delay could be money left on the table and increased chances of outliving your money. Ultimately, our retirement calculator will give you a rough idea if you have enough to retire and if you don’t yet, we give you some options to get there. It takes less than a minute and the results are instant.
#2 Trouble Signs of Danger
Spotting trouble signs early can save you a boat load of money and possibly shave years off the amount of time you need to work. Here are three trouble signs:
- Withdrawing more than 4% per year – If you are withdrawing more than planned, it likely means that you may need to consider cutting back on some expenses.
The 4% Rule is a widely accepted rule of thumb for spending in retirement. If you withdraw 4% of your account annually, you will likely not outlive your money and may even have funds leftover to pass on to your heirs.
- Forced sales of any kind – for example taking a loss on the sale of an asset or securities because you need the cash ASAP and don’t have the time to wait for a better price. If you are cash strapped in this way, there is likely trouble on the horizon.
- The Fourth-Year Check-Up – writer, Jim Otar analyzed portfolios using historical data. He compared balances at year 4 and year 20 to the initial retirement balance and asked, ‘is the balance higher or lower than at retirement.’ He found that when the balance was higher in year 4, the account would often be a long-term winner. If it was less in year 4, then it had more potential to run out of money. Obviously, a major market downturn could skew these results.
#3 FOMO (Fear of Missing Out)
It’s real! It’s an emotional response but it doesn’t actually guide good investments. When I was younger, I wanted a Ford Mustang because it was the coolest of cool and several of my friends had one and everyone else wanted one. Instead, I ended up with a Honda Civic. At the time, not so cool but it ran like a champ. Looking back on it, the Civic was the wise purchase but I still felt like I was missing out.
Try not to get caught up in what others are doing or investing in. It is easy (and normal) to want to be a part of the big trend that your dentist told you about and your golf friend is bragging up. Keep in mind they’re only telling you the good side of that investment. Most likely there is an equally risky side, and most people don’t share their losses. It’s far more important to stay the course and avoid extra risk because it makes you feel like a part of the trend. Remember that you can make a good income off your retirement account without participating in that kind of risk/reward scenario. Stick to your portfolio plan.
#4 Find Your Comfort Level
Once you have a retirement plan that you’re comfortable with, it should come with peace of mind. These are, after all, your golden years and I hope yours are enjoyed to the fullest.
Want to find out if wealth management is right for you? You’ll never know unless you ask. Click on your favorite messaging platform and ask Jarrod.