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.
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.
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
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.
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.
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
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