Planning For Retirement Doesn’t End When You Retire

Most people think that planning for retirement ends on their last day at work. But in reality, all of the planning you did up until that point—figuring out when you want to retire, how much you need to save each year, when to claim Social Security—is only the first phase of retirement preparation. On the day you retire, the second phase begins.

What does this second phase of retirement planning entail? The crux of it is making sure that all of the things you said you wanted to do in retirement actually happen, while at the same time being prepared for any unexpected cash-flow demands, such as a new roof, water heater, car or health-care expenses.

Another aspect of post-retirement planning to consider is how your lifestyle expenses will most likely have three distinct phases:

1. You want to maximize your retirement savings to make the most of your healthy years—what some might call the “go-go” years
2. While making sure your money will cover your future “slow-go” years, when health-care costs start to rise
3. And eventually your “no-go” years, which may include nursing home expenses.

For married couples, another planning point to consider is ensuring they’ve got a retirement-income back-up plan should one spouse suffer a long-term illness or die prematurely. It’s especially important to consider and plan for an unexpected illness or death that potentially could occur early in retirement. These types of considerations play a big part in determining how and when, for instance, to claim Social Security. (Be sure to consult with a financial adviser before claiming Social Security benefits; making the wrong claiming decision could leave your spouse with unnecessarily small benefit payments over a retirement that could last decades.)

There are serious repercussions to failing to plan for the post-retirement phase of your life. Often, retirees spend too much money in the early years of retirement, and then suffer later in life because of it. Another common problem is retirees who are too afraid to spend anything at all. Their fear of running out of money is so strong, they never enjoy their “golden years.” Both situations can be avoided with a carefully developed post-retirement plan and regular monitoring of that plan’s implementation.

Some of the key aspects of maintaining your plan over time include making adjustments to ensure your portfolio aligns with your changing risk tolerance, shifting investments to acknowledge macroeconomic changes such as, for example, lower expected economic growth in the U.S., and in light of the changing market environment, such as the likelihood of higher interest rates in the future.

For most people, the last day of work signals the time to really start enjoying life—not worrying about whether you have enough money to pay the bills. To help avoid a retirement spent worrying about money, consider making an appointment with a financial adviser today. Even if you’re already retired, it’s not too late to make plans for your financial future.

Eric C. Jansen, ChFC is the founder, president and chief investment officer of Westborough Massachusetts-based Finivi, which provides fee-based retirement income planning and investment management services for successful individuals and families nationwide. Do you need help planning for retirement? You can call (800)530-6635 for a complimentary consultation with a financial planner.