A Comprehensive Guide to Retirement

Retirement Guide

By Kris Maksimovich, AIF®, CRPC®:

As financial advisors, we often find that people share the same common questions about retirement:

– Will I run out of money?

– Should I sell my house or downsize?

– Can I afford to keep my lifestyle?

Often, retirees make it through the honeymoon stage of retirement only to find themselves left feeling bored and unfulfilled.

As we see it, we have two parts of our job as financial planners. One part requires helping you answer these questions; the other involves helping you consider all facets of retirement planning, including behavioral and emotional aspects.

Naturally, finance plays a large roll in retirement readiness, but there are other pieces that should be considered as well. We have developed a process over the years that covers six key retirement focus areas including: finance, activities, wellness, relationships, interaction and development for this retirement guide:

Activities

Activities can encompass work, volunteering, hobbies and travel. In fact, retirement shouldn’t mean that you are no longer busy. Before you retire, you should consider your current activities and determine if there are others you would like to add.

Will you travel or take on new hobbies and activities? How many activities will you schedule? Are they physically demanding? Contemplate what aspect of these activities you enjoy such as physical, social, intellectual, creative or solitary to help you formulate a list.

Work. Though you may have just ended your career, work is still a possibility. The question is, do you intend to continue in the same field or do you want to try something new?

To answer this question, consider what type of personality you have such as conventional, enterprising, investigative, artistic or social. Next, determine your motives for continuing work, whether it be income, purpose, social, status, or simply something to do to fill the time.

Finally, consider if your needs are best met by working full-time, part-time, consulting or volunteering. By examining your personality and options, it may help you determine if working is an activity that would be useful for remaining connected once you retire.

Volunteering. If you prefer to give back to the community, consider what your strengths and talents are. Do you have skills you can leverage to help an organization? Consider how much time you would like to commit and at what level. Volunteering can be a highly rewarding activity provided you consider setting some personal limitations when working with different groups.

Hobbies. Since you’ll have more time for activities and hobbies, you’ll need to consider what your needs currently are and what they will be in the future. Taking up ballroom dancing may not be an activity that you’ll be able to carry on for a long time, especially if you have never been physically active in your younger years. Likewise, taking up scrapbooking may not offer you enough mental stimulation or physical activity if you are sitting alone for hours. Take each hobby into consideration by listing the pros and cons to help you plan your activities now and in the future.

Travel. Many people view retirement through rose-colored glasses and think they will travel the world once they retire. They even dream about all the places they will visit. But the truth is, many never do because we don’t retire in a vacuum. Though you may no longer work, the other aspects of your life continue once you retire. It may be unlikely that you will hit the ground running on an “around the world in 80 days” type adventure without a lot of advanced planning and preparation.

Wellness

There are a variety of well-known health factors that can create issues during retirement. They include weight, diet, sleep, exercise, stress, tobacco and alcohol use. There’s never a better time than now to ask yourself what would you change and how would you change it?

Health is not the only factor that can affect your vibrancy throughout retirement. Harboring emotional baggage, grudges and negative feelings can be just as harmful to your vitality as dealing with physical needs, pain and emotional issues.

Also, consider that attitude is everything and it’s up to us to determine if we adopt a negative or positive outlook.

Relationships

When you retire, the relationships in your life will likely play a large role in your satisfaction. These relationships include those with a partner, spouse, parent, child, friends and acquaintances.

Consider what you want to get out of your relationships. Do you want to spend more or less time together? Where do you go to meet people? How will your personality traits affect your current and future relationships as you continue to age?

Sometimes these relationships can create changes to your own retirement plans, such as the birth of grandchildren, when an adult child moves back in, when a parent needs care and when friends need support. How much time you plan to invest in these relationships should be weighed against the other parts of retirement outlined in this guide.

Interaction

Since you will now have an abundance of time on your hands, you should decide what level of interaction you need in leisure.

Will you downsize, move into a community or split your time in residences? What will your interactions with others look like? Some people are quite social, yet others prefer to be spectators, while others like creative, intellectual or even physical pursuits.

Determining what you will do with your leisure time is an important aspect of retirement happiness because it can be affected by your financial situation and health.

Consider what your personality type is. Someone more outgoing will need more interaction with outside sources than an introvert. Ensure that you and your partner value each other’s personality type so you can engage with others at your own comfort level.

Development

Personal development does not have to end simply because you retire. It’s important to continue to find meaning as you move into the retirement phase of your life.

Will you continue learning new things like languages and hobbies? Will you begin using online memory development tools? How will you learn these new things? Will you take courses, or do you intend to go back to school? Perhaps you plan to complete a previous goal.

Consider what you are passionate about and think about how this might change in the future based upon the other parts of retirement outlined in this guide.

Finance

Quite literally, you can generally expect a third of your life to be left when you retire. This means that your preparations must be flexible enough to cover a large span of years. Retirement planning involves evaluating your current financial standing and creating an accumulation strategy that will help ensure a desired retirement lifestyle.

Business owners or executives may have access to other tax-advantaged retirement savings vehicles as well. A successful plan put into place during the wealth-building life span should address ways to maximize growth and tax-efficient distributions, as well as ways to leave retirement assets to the next generation.

There are several popular options to save for retirement:

  • Qualified employer-sponsored plans and 401(k)s
  • Individual retirement accounts (IRAs)
  • Annuities and pensions
  • Personal savings
  • Executive deferral plans

Withdrawal strategies of accumulated assets are paramount to any successful retirement plan. The correct distribution method will help ensure that your retirement savings last beyond your lifetime, with minimum shrinkage from taxes. An advisor can help you formulate a “safety first” withdrawal strategy, analyzing the full range of sources available to you including social security and employer plans.

When it’s time to take distributions, it may appear to be a simple matter of selling a particular stock, but there is somewhat of an art to it. Determining which assets to liquidate and when to do so requires careful analysis of projected returns, income streams and taxable consequences. That’s why it is always a good choice to consult with your advisor.

We hope you get some good takeaways from this retirement guide and that you can move into retirement with well-planned purpose and vitality. As we see it, there are no do-overs in retirement, so make yours a great one.

Kris Maksimovich is a financial advisor located at Global Wealth Advisors 18170 Dallas Parkway, Suite 103, Dallas, TX 75287. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at (972) 931-3818 or at info@gwadvisors.net.

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