If one of our major life goals is to someday retire, how do we gain a level confidence going into retirement? After all, isn’t this why we have saved and invested so diligently over the years?
Look at your confidence about being prepared for retirement this way- it is like solving an equation that has two equal sides. You must find the solution for each side of the equation to be confident and prepared for retirement.
The first side of the equation is whether we have enough saved (invested) for retirement and if the amount will last for the remainder of our lifetime. If you are working with a financial advisor, they probably have guided you through the numbers and have discussed where you currently stand and where (range of outcomes) you will end up when you decide to retire. Some of you may have done this on your own and have a pretty good idea about your ability to retire confidently. Some of you may not have given this much thought or have not ‘run your numbers’ to see where you are at. If you have not done this, do it soon. If your financial plan needs some altering, it is better to know earlier as opposed to later when it is much more difficult to get back on track financially. This side of the equation is more tangible. You can see the number which provides a visual representation to answer whether you can be confident in what the results of this side of the equation shows.
The financial side of retirement results tell you roughly how much you can spend each year in retirement and approximately how long your money will last. This is of course supplemented with any pension, social security or other income during retirement. Other financial factors include such things as long-term care, medical care and living expenses during retirement. While these can be harder to predict, they still can be planned for to some degree, giving you a level of confidence going into retirement.
The other side of retirement- which is one of the titles of my presentations to clients and advisors, focuses on the non-financial aspects of retirement. These are the things that are not related to your finances. These are about living a life that is relevant, healthy, active and connected in retirement. They are also not tangible in the sense that they are much harder for us to visualize.
To become confident in these non-financial aspects of retirement, create a plan to visualize what each aspect will look like during retirement. Because we cannot easily visualize these areas, the non-financial aspects of retirement can be more difficult for us to plan and prepare (solve) for. Visualizing what each of these areas will look like in retirement creates confidence in our plan for retirement.
There are seven non-financial areas that I believe need to be planned for to live a confident retirement: Purpose & Identity, Values & Beliefs, Work & Meaning, Health & Activity, Family & Friends, Leisure & Travel and Home & Location. To simplify this a bit, I lump related aspects together- so there really are fourteen areas that people need to plan for that will help them transition onto retirement more comfortably.
The diagram below provides another view of the non-financial aspects of retirement. For those of you used to seeing your investments classified various categories of stocks, bonds, and cash, the pie chart may look familiar. It is really similar when creating you Encore Portfolio, as I like to call it. Your Encore Portfolio includes a number of areas that need to be considered and planned for to create the retirement you envision.
Here are a few questions from each area to help you begin to think about retirement- none of which are about the money. Begin creating the framework for your plan by writing down your answers to the following questions.
Purpose & Identity: Who will you be when you retire? What will you purpose be when you retire?
Values & Beliefs: What is your perception of retirement? Is it positive or negative? Are you currently living your life according to your values and beliefs?
Work & Meaning: If you do not have work to go to each day what will you do? What will you find meaning from if you do not work?
Health & Activity: What is your current state of health and level of fitness? What areas of your health or fitness would you like to change or improve to better enjoy retirement?
Family & Friends: How will you manage your friendships and family relationships in retirement? If many of your current friends are still working, have retired and moved or have simply “vanished,” how and where will you develop new relationships?
Leisure & Travel: What types of leisure activities do you want to spend time pursuing in retirement? How much do you (and your spouse) want to travel during retirement?
Home & Location: Where would you like to live in retirement? Should you downsize?
By planning for both the financial and non-financial aspects of retirement, you can move into this phase of your life more confidently, knowing that you have solved your concerns about both sides of the equation. And, equally as important, knowing that you are prepared for this transition- ready to live a relevant, healthy, active and connected life during retirement.
Ultimately, your happiness and success during this phase hinges on how confident you are in achieving both your financial and non-financial goals. Planning for each side of retirement will increase your confidence which leads to greater success.
To learn more about how I can help you plan for each of the non-financial aspects of retirement and how to become more confident in each of these areas, please contact me. There are many questions and worksheets that we can discuss that will help you create your Encore Portfolio. You can contact me at 952-994-8937 or firstname.lastname@example.org.