Which of These Three Types of Soon-to-Be Retirees Are You?

Three different types of retirees looking concerned, confused and confident.

(Image credit: Getty Images)

People nearing retirement often fall into three types.

Some are concerned about what the future holds in their post-working years, but they have taken no steps toward creating a retirement plan that could help alleviate their worries.

Others have researched retirement strategies and amassed quite a bit of information, but they lack clarity about what to do with all of it. They are overwhelmed by the options.

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The third group of soon-to-be retirees can be thought of as confident. They not only do their research but also have a firm idea of what to do with their findings.

You can think of these types of people as the three Cs: concerned, lacking clarity, confident. Let’s take a look at each to see which best describes you.

Concerned

Instead of viewing retirement as an exciting time of new possibilities, these individuals are anxious. They have been saving — possibly for decades — but they are unsure whether all the efforts they made to create a retirement nest egg will be enough.

Family members, friends or the media have convinced them they need a certain amount of assets before they can even consider retirement. They have tried mightily to accumulate wealth with the perception they must hit a specific dollar-amount goal — a goal that, frankly, may be unattainable for them.

When they seek financial advice, their worries can be summed up in one question: “Am I going to be OK?”

They want to be able to sleep well at night and not lie awake at 2 a.m., staring at the ceiling, distressed about their financial situation. They want to know that, regardless of what happens with the markets, an election or some other event beyond their control, they will be poised to come through it. They also want to be able to support whatever lifestyle they have grown accustomed to over their adult lives.

To help allay many of their fears, they need to understand what they are dealing with is a math problem to be solved. By taking all the income sources they will have in retirement — Social Security, possibly a pension, savings — they can create a retirement plan that will give them more confidence about the future.

A strong retirement plan helps you determine your retirement expenses, the amount of income you will need to pay for them, and how to create that income. A plan takes the mystery out of retirement.

Seeking clarity

Take a deep dive into retirement planning and the mountain of data you accumulate can leave you dizzy.

At what age should you claim your Social Security benefit? How do you know what to choose among all those financial tools — annuities, mutual funds, bonds, bond funds, dividend-paying stocks? What are required minimum distributions and how do you plan for them? Should you convert your tax-deferred retirement accounts to a Roth IRA? What tax strategies can help you reduce the bill you owe Uncle Sam?

Those seeking clarity think about all these questions and more. They know they need a retirement plan and want to do everything possible to create it. So, they do their research, go to classes, listen to financial radio shows or podcasts and elicit advice from friends.

In the process, they gather a large stack of puzzle pieces. Unfortunately, their minds become cluttered with so much information that they hardly know how to begin putting the puzzle together.

What they don’t have is clarity. Yes, retirement planning comes with endless options. And all of those options are good — for someone. But not every option is right for everyone. Those seeking clarity need to find a way to focus on what applies best to their particular needs and shove the rest to the side.

For example, let’s consider the question of when to take Social Security. You can claim your benefit as young as age 62, but the monthly payment is reduced. You get more money if you wait until your full retirement age (67 for most people) and even more if you postpone claiming the benefit until you are 70.

Someone might take Social Security early if they can no longer work and need the monthly income. They also might choose that option if they have a health condition or a family history that points to a shorter life expectancy. Most people, though, are better off waiting until they can get the higher amount.

It’s easy to see how the decision comes down to your personal situation — and not what someone else did. That other person may have based their decision on an entirely different set of circumstances.

Confident

People who are confident about retirement often are do-it-yourselfers when it comes to planning. Like those seeking clarity, they do plenty of research, but they understand how to use what they learn, and they enjoy managing their money on their own.

These are the kind of people who revel in the opportunity to build a spreadsheet, ponder the numbers and create a plan.

They do seek advice from professionals, though, mostly to confirm that what they are doing is correct and that their numbers are accurate. Another motivation is that they may have a spouse who is not as enamored with or adept at financial planning as they are. They want to protect that spouse and make the transition to an adviser easier in the event that they are no longer able to take the lead on finances due to sickness, disability or death.

Where do you fall in all of this?

Whether you categorize yourself as concerned, lacking clarity or confident, it’s worthwhile to find a financial professional who can help alleviate those concerns, guide you to clarity or confirm that your confidence is warranted.

Regardless of which C you are, retirement planning is not something to leave to yet another C — chance.

Ronnie Blair contributed to this article.

The appearances in Kiplinger were obtained through a PR program. The columnist received assistance from a public relations firm in preparing this piece for submission to Kiplinger.com. Kiplinger was not compensated in any way.

Disclaimer

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

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Sean P. Lee is a managing partner and Investment Adviser Representative with Elevated Retirement Group. Since 2002, Lee has helped families reach and maintain their financial goals. Lee has been featured in The Wall Street Journal’s Market Watch, The Deseret News, The Salt Lake Tribune and USA Today. He has also been featured as a local financial adviser on Utah’s NBC station, KSL 5.