Aahhh. Retirement. Finally, the day when you don’t have to set the alarm, and there is no more driving to work. Your life is totally yours. This picture represents the ultimate vision for most people. It’s the transition to the “next phase” of life, and all the things we look forward to. Whether you are already retired or it is still on the horizon, the image is something we can all relate to. While at first glance, thoughts of a successful retirement in America seem to be nothing but sunshine and roses, a few critical and often complicated things enter the equation. After all, it is a transition. One is emotional, and the other is financial.
For many years, pre-retirees and retirees have been walking through our office doors. As we engage in the retirement planning process, the thing we hear about most is the anxiety of having no more paychecks coming in. Most people have been working their entire lives and have relied on their ability to earn income. All of a sudden, in one day, it all stops. Now that the economic and lifestyle systems have become so complex in our society much planning needs to be done to secure a successful future. Finding a sense of security by addressing the emotional side of the transition can prove extremely powerful. It is very real and can often cloud decisions. One thing that makes our firm unique is that we have developed a very integrated process to deal specifically with this issue.
When we get to the financial side of retirement, there are income and tax planning, Social Security, health care, estate planning, and many other things. However, the most often overlooked and misunderstood item is how money needs to be managed before retirement vs. after. Much of the current system is built on choices like 401k plans and the opportunity to invest for long-term growth. When people retire, their objectives change entirely, and now there is a need for income. They have reached the distribution phase. Many choices currently available in these plans provide the minimal opportunity to address these changes. Yet, many people need to be made aware of how significant the shift is and what we can do about it. It’s like being stuck in the accumulation phase and using the wrong tools for the job. Addressing this process through a solid education, and expanding investment opportunities that directly address retirement income needs, can be powerful. In our opinion, these ideas are not optional but essential.
Retirement in America is a good deal from a historical perspective. Most of the time, it wasn’t even an idea, as people worked until they died. The fact that people today receive the opportunity to retire is a big deal and quite a blessing. With that said, and as with most things in life, there are always unique situations that need to be addressed, and retirement income planning is no different. The issues we discussed above are those things, and a full understanding proves beneficial. Oh, and by the way, if you are sixty-two years old or so and going to be retiring in three years, you better get a handle on all of this. You only have 36 paychecks left for the rest of your life.
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