Coulda. Shoulda. Woulda.
Three words we never want to hear from our Keen Wealth clients who are well into their retirements.
And, I’m happy to say, three words we don’t hear very often!
But we do work with retirees who tell us that there are things they wish they’d done differently. What’s interesting is that the major retirement regrets that clients share don’t really have to do with how their financial planning played out. Instead, these folks regret decisions they did, and didn’t, make that impacted how they lived in retirement.
This is consistent with a recent article in U.S. News, which covered some of the biggest regrets that retirees can experience. We selected five of those regrets that we feel can be avoided with some self-reflection, some forethought, and some honest dialogue with your spouse and fiduciary advisor.
1. Not setting goals for retirement.
We emphasize to our clients the importance of retiring “to” something, not just retiring “from” work. That might seem like a small turn of phrase, but the implications can be huge. If you slip into a mindset that your retirement just means a big part of your life is over, it’s easy to start feeling useless and depressed.
The reality is that this generation of seniors are living longer, more active, and more fulfilling lives in retirement than any other generation in history. Embrace the freedom and opportunity that this new version of retirement can provide.
Don’t just play more golf, set a handicap goal and work with a coach to hit it. Don’t just dust off the crafting table, take some online classes and learn how to turn your handmade treasures into your own business. Don’t just eat whatever’s in the fridge for dinner, start working through those fancy cookbooks and develop your chops.
Your goals don’t have to be enormous, but they should encourage you to keep learning and growing in retirement so you’re progressing, not regressing.
2. Experiencing social drawbacks of early retirement.
Planning to retire before age 65 is becoming an increasingly popular goal. Folks figure if they have the financial means to stop working, why wait? They’d rather enjoy their assets while they’re young enough to travel, play sports, etc.
Unfortunately, your friends and family might not have that luxury. Tee time and tea time are going to get old fast if you don’t have anyone to join you. Early in your retirement you also might feel a little bit lost without the structure and camaraderie that your workplace provided.
Even if you and your spouse are retiring together and share many common interests, you’ll both need space to pursue some hobbies and goals apart from each other. Your local senior center can be a great resource for meeting new people and getting involved in new activities. You could join a golf team or league instead of playing solo. And if you need a little more structure, you could look for a part-time job or a volunteer position at a favorite charity or community organization.
3. Underestimating the risks of retirement.
When you stop collecting a regular paycheck, your financial picture is going to change dramatically. Instead of building your retirement savings and assets, you’re going to start withdrawing from them. You’ll need to determine a good annual withdrawal rate and budget accordingly. You and your spouse will have to transition away from your old health care plan to Medicare, or, if you’re under 65, you may have to pay for a plan out of pocket. You’ll be using different tax forms. You’ll have to decide when to start taking Social Security.
My team at Keen Wealth helps clients coordinate these decisions for the best potential financial results. But then your life happens. Your roof starts leaking. Your spouse slips and ends up in the hospital. An adult child makes a poor decision and needs help.
These changes and challenges are easier to deal with when you’re younger and when you can see that next paycheck coming in two weeks. But when you’re retired and living off a fixed income, these things can dent your nest egg. Working with a fiduciary advisor is the best way to mitigate these and other risks. We know how to plan for what we can anticipate, and, what adjustments to make for what we can’t anticipate.
4. Buying stuff instead of experiences.
We want our retirees to enjoy themselves, and part of that enjoyment comes from using your assets for more than just the monthly bills.
It’s amazing how quickly that jolt of pleasure we get from buying new things disappears. Drive your new car around the block a couple times and it becomes … just your car. You get used to it. Then you start looking at boats, and well, you can guess how that cycle plays out.
On the other hand, many studies have found that experiences and the memories they provide can be a long-lasting source of happiness. So, while buying a sports car might be a fleeting joy, the camper you and your spouse buy to tour national parks might prove to be priceless. A new big screen TV will fade with time, but memories of that dream vacation to Paris will last forever.
5. Not focusing on what really matters.
A common theme running through these retirement regrets is using money in ways that won’t necessarily improve your life. That can mean buying too much stuff. At the other end of the spectrum, that can mean being so worried about running out of money that you live too conservatively.
Ultimately, it’s not the size of your nest egg that’s going to determine if your retirement is successful. What matters is doing the things you love doing with the people you love the most. We’re proud of the work we do at Keen Wealth to help our clients achieve that goal.
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.