We’ve all heard about the financial risk of retiring too early. But what if life throws you a curveball? What about the risk of retiring too late? We provide some insights on how to stop worrying about things that can go wrong and instead focus on what’s going right.
What’s Going Right
As clients get nearer to retirement, we typically hold several meetings. During the first meeting we discuss issues that are common to all retirees. When is the right time to retire? Will my assets be enough to last through my retirement? Are my assets invested correctly as I approach retirement? Will I invest differently than I did while working? These are all excellent questions. With proper planning, we can help you take control of your financial future and achieve your goals for retirement. The Northern Way Retirement Checklist, available here, provides a list of action items to complete to help you get started on the right path to retirement planning. Have you already started your retirement planning? Our Retirement Checklist can serve as a guidepost to ensure you take a comprehensive approach.
The Curveball
I recently held a second retirement transition planning session with Rob, one of my clients. During our first meeting, we discussed the usual retirement concerns and outlined his plan to retire in 3 years. During this follow-up meeting, his demeanor changed, and his attention drifted away from concerns about outliving his money. He ultimately shared that he had received some bad news regarding his health between the last and the current meeting. He shared that his whole mindset about retiring shifted when he received the news. He was no longer concerned about waiting to do things or being concerned about running out of money. He realized life is finite and can change in an instant. He began thinking about the truly important things to him and what he wanted to do with the time he had left.
Rethinking Your Retirement Timeline
Rob realized he had shifted from making decisions based on worrying about financial insecurities to focusing on what he wanted to accomplish. At Northern Way, we realize that life can throw anyone a curveball at any time. That’s why we take a “Bucket Strategy” approach to investing as one of the foundations of our financial planning process. Because this approach to retirement planning segregates your investments into three buckets according to when the money will be used: immediate, intermediate, and long-term, it allows us to redirect investments to suit your needs as they change.
Each bucket serves a specific function and is designed to address various financial needs throughout retirement. By implementing this strategy, you’ll have access to cash in the short term; your intermediate bucket investments should keep pace with inflation, and long-term bucket investments are allocated to grow your nest egg more than inflation, allowing you to refill your immediate and intermediate buckets. You can read more about our Bucket Strategy here.
If your plans for retirement change, a thoughtfully constructed Bucket Strategy provides the flexibility to ensure that your financial plan remains aligned with your evolving needs. If you intentionally decide to shift your retirement plan to a shorter-term focus, we can adjust the holdings in your buckets to accommodate your desire to accomplish more in the short term. Regardless of your situation, periodically reviewing your buckets allows you to make adjustments based on changes in your financial situation, market conditions, and retirement goals.
Final Thoughts
Your retirement years should be filled with peace of mind, free from financial worries. One of the ways to live the life you want and enjoy your retirement season of life it to have a carefully crafted financial plan for retirement. We’re here to support you no matter how long or short your plans for retirement. Let us help plan for the expected and be prepared for the unexpected. Contact us; we’re here to help.
