More and more retirees are doing something very surprising with their nest eggs.
OK, OK, I’m exaggerating a little bit. After all, cracking open that nest egg you’ve worked so hard for and finding money that will support you through your golden years is definitely a very big something.
But most folks who follow the kind of diversified, long-term strategy we advocate at Keen Wealth will retire with a significant cushion of money to last their lifetime. What’s interesting is we find clients sometimes have trouble switching from a savings mode to a spending mode in retirement.
In a good portion of the cases, they’re spending their money relatively conservatively: paying their bills, maybe indulging in a night out or two.
Why is that? Why do retirees sometimes deny themselves comforts, luxuries, and experiences they can afford, and that they deserve to enjoy after a lifetime of diligent planning, saving, and investing?
Trouble flipping the switch
For many new retirees, that very routine of planning, saving, and investing is an engrained routine. They are so used to making those deposits that they have a hard time stopping! They stay in “savings mode” rather than flipping the switch to “reward mode.” They’ve spent their whole working lives planning to have enough money for retirement, and now they’re worried that it won’t be enough.
I certainly understand why so many folks are worried about running out of money in retirement. As we discussed recently, longer life expectancy is leading to higher health care costs across the board. Pensions are becoming rarer. Our tumultuous politics make folks nervous about how the government might affect taxes, Social Security, interest rates, and the markets.
But if you’ve worked with a fiduciary advisor and committed to a long-term plan, your basic costs of living shouldn’t be keeping you up at night. You can always come in and talk to us about any big ticket purchases you’re contemplating. We’ll help you double-check that your plan covers some fun and look for any adjustments that will make you feel more comfortable about the cost. We can also help you plan for any specialized health care needs and put you in touch with pros who will help you make the best Medicare choices.
Have you ever read those studies about how lottery winners aren’t any happier than the rest of us? It sure sounds hard to believe, but the simple fact is that people are very adaptable. We get used to our situation in life, both the good and the bad.
We find comfort in our routines. What we find though, is a successful retirement is an ART that revolves around the Activities you enjoy doing, Relationships with the people you love, and a new schedule that gives you Time to explore your passions. So while routines are comforting, you might want to experiment a bit and try some new things in retirement. You may be surprised at how invigorating it can be.
Again, check with us if you’re worried that practicing this ART might throw off your spending and withdrawal rates.
Your parents’ retirement
We inherit many of our attitudes about money from our parents. We watched them deal with their finances when we were growing up. We heard them whispering about that fancy new car the neighbors bought. We saw how their feelings towards money affected holidays and vacations.
And if you’re a baby boomer, there’s a good chance you absorbed money ideas that were profoundly influenced by your parents’ experiences of the Great Depression and World War II. That belt-tightening probably carried over into how your parents lived in retirement as well.
But your retirement is going to be very different than your parents’ retirement. Advances in technology and our understanding of fitness and nutrition may keep you healthier and more active than retirees from a generation ago. Advances in communication and transportation have made the world much smaller, its wonders and opportunities for learning more accessible. You’re going to have time to create an exciting new chapter in your life.
And your financial plan is going to give you the resources to live that chapter to its fullest.
If you’re having trouble “flipping the switch” and getting into a reward mentality, please come in to Keen Wealth and talk to one of my fiduciary advisors. You deserve to live the most rewarding life possible in retirement. We can help.
Bill Keen is a CHARTERED RETIREMENT PLANNING COUNSELOR℠ and independent financial advisor with more than 25 years of industry experience. As the founder and CEO of Keen Wealth Advisors, a registered investment advisory firm, he specializes in providing personalized retirement planning designed to help people thrive before and during their retirement years. With a passion for educating others, Bill regularly blogs about retirement planning, hosts the podcast Keen on Retirement, and has contributed to U.S. News and World Report, Reuters, Wall Street Journal’s Market Watch, Yahoo Finance, and other publications. Based in Overland Park, Kansas, Bill and his team work with clients throughout the greater Kansas City area and across the nation. To learn more, connect with him on LinkedIn or visit www.keenwealthadvisors.com.
Keen Wealth Advisors is a Registered Investment Adviser. Nothing within this commentary constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Keen Wealth Advisors manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed here. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.