If the past year has taught us anything, it is that so many things in life feel “out of our control.” The COVID pandemic certainly has dominated life for the past 16 months. However, stock market volatility, unpredictable weather in all parts of the country, social unrest and a political climate like we’ve never seen before are just a few things that have made life for many more uncertain than ever.
For those preparing for or already in retirement, this can seem even more pronounced. You work hard for many years and begin dreaming of the possibilities for this next phase of life, all while watching things around us happen without much clarity or certainly. Not knowing how the events of today will positively or negatively impact retirement, can be a significant source of stress and worry for those not properly prepared.
It’s more important that, while you dream of the freedom and independence that retirement could bring, you stay focused on three things you can control. I call them the three P’s of your retirement: Philosophy, Process and Planning.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Philosophy
Take time to reflect and understand your own philosophy about what your financial life will be about during those golden years. If you’ve been a diligent saver and good steward with money, will life just be about having an uncoordinated basket of investment or insurance products, hoping they will grow enough to last long into the future? Will you continue to have an investment-only focus, where happiness in retirement will be dependent primarily on positive market returns?
Compare that to having a mindset focused on retirement strategies such as preservation, distribution and coordination. Don’t get trapped into a belief that your investments, no matter how much you have saved, are a RETIREMENT PLAN. Make sure your philosophy is about being comprehensive and holistic when considering all areas of your financial life.
Process
Now that you have begun to shift your mindset from one of “accumulation” to that of “distribution and preservation,” it’s time to determine what your process (or your financial adviser’s process) will be to implement retirement strategies that will help mitigate all types of financial risks as we age.
Designing your retirement “blueprint” should not feel overwhelming, complicated or confusing. Trying to design and implement strategies for all areas of our retirement, such as income, tax, health care and estate planning, can be intimidating and cause us to avoid having the right conversations. Quite often, it leads us back to focusing only on those things we feel comfortable with, such as our investment accounts and fixating on the market.
The process for creating your plan should be systematic, go step by step, brick by brick, addressing each of these areas one at a time. This will seem so much less intimidating and increase the likelihood you will keep your focus of having a comprehensive, holistic and coordinated retirement.
Planning
No matter how systematic your process, the planning you do should be retirement “specific” and “customized” to you. Do not settle for using generic retirement rules and outdated advice. Realize that accumulating your wealth is significantly different than preserving and distributing your wealth. Many areas of your financial life go from being “automatic” or “set it and forget it,” such as investing or creating monthly income, to needing a more active approach.
Something as popular as the 4% rule, which came to be in the early 1990s as a suggestion for the best way to make your money last throughout retirement, is no longer applicable and just a lazy approach to creating retirement income.
Other common considerations and decisions that need to be customized to you and not generic are things such as:
- When to begin Social Security benefits.
- Roth conversions.
- Using tools properly, such as annuities and life insurance.
- Establishing an estate plan that accounts for many of the “what ifs” in life.
Too many considerations about retirement to list here should be customized and specific to give you the best opportunity to live the retirement you want to live.
As the world we live in continues to feel out of control, take a deep breath, a few steps back, and focus on these 3 P’s for an AMAZING RETIREMENT!
Disclaimer
Investment Advisory Services offered through Trek Financial, LLC, (Trek) an SEC Registered Investment Adviser. Information presented is for educational purposes only. It should not be considered specific investment advice, does not take into consideration your specific situation, and does not intend to make an offer or solicitation for the sale or purchase of any securities or investment strategies. Investments involve risk and are not guaranteed, and past performance is no guarantee of future results. For specific tax advice on any strategy, consult with a qualified tax professional before implementing any strategy discussed herein. Trek 21-115.
-
Visa Is the Worst Dow Stock Wednesday. Here's WhyVisa stock is down sharply Wednesday after the credit card company came up short of revenue expectations for its fiscal Q3.
-
Another Analyst Moves to the Sidelines on Tesla Stock After EarningsTesla stock is spiraling Wednesday after the EV maker's big earnings miss and Wall Street has been quick to weigh in. Here's what you need to know.
-
Confused by Annuities? Making Sense of the Different TypesMany investors aren't sure if annuities are a good option for meeting financial goals. Let's look at the different categories, along with their pros and cons.
-
Talkin' 'Bout My Generational Wealth: Baby BoomersWith retirement, each generation has different priorities and challenges. For Baby Boomers, it's a matter of ready or not, here it comes.
-
How to Avoid a Big Hassle if Your Financed Car Gets WreckedHow an insurance check is made out for repairs can cause a world of problems if the lienholder is left out.
-
Estate Planning Strategies to Consider as Election NearsAre big changes in tax laws coming soon? Not likely, but you might want to take advantage of higher estate and gift tax exemptions well before the end of 2025.
-
How to Get Your Money's Worth From Your Financial AdviserA good financial adviser will focus on how your financial planning and investment strategy align with your lifestyle and aspirations.
-
Think of Prenups and Postnups as Financial Planning ToolsThese contracts provide a clear framework for asset management and protection and are especially useful if you get married later in life.
-
Congratulations on Your Raise: Three Things to Do With ItWe're not saying you shouldn't spend it on a new car, but there are some considerations to guard against lifestyle creep and to help ensure a comfy retirement.
-
Check Off These Four Financial Tasks to Finish 2024 StrongThe new year is a popular time to set financial goals, but now is the ideal time to check how you're doing. Four tweaks could make a big difference.
