The Cautious Investor

Retirement Age Anxiety: Answers for Financial Questions at Retirement

I’ve heard the following words countless times from our clients: “Saving was the easy part.”

Not at all discounting the discipline it requires to deny yourself the instant gratification most people naturally crave, but it makes sense when you truly ponder it. Once you set your mind on saving, the decisions you make about how you invest, such as using target date funds, and which instruments you use (e.g., Roth vs. Traditional vs. After-tax), oftentimes pale in comparison to the decisions required when you’ve reached the mountain top.

Think social security benefits, requirement minimum distributions, pension survivorship, when to turn on income guarantees on annuity investments, taxable implications to withdrawals, weathering bad markets when you no longer have the ability to save more and so on. If one visualizes financial net worth like a mountain – accumulating wealth during one’s working years, then spending it down in retirement – then one can also visualize how falling up the mountain doesn’t always hurt as much as falling down.  

We’ve found one way to combat this anxiety is to approach your retirement like a home project, and your assets like a collection of tools in a toolbox: all of which, if maximized to their full potential, get the job done on time and under budget. One could probably use a screwdriver to hammer a nail and still experience some light success. It obviously wouldn’t generate great results, will take longer and be more strenuous. And maybe your project only required adhesive rather than nails.

Here are a few different things to consider when approaching this exciting and terrifying phase of life.

All of these decisions coming at me around retirement are overwhelming. Where should I start?

The best place to start is simply with you. We’ve found that a path presents itself and people are more likely to stick to the path, if they focus first on how they want their retirement life to go.  That means identifying your goals. 

What age do you want to retire? How much do you desire to spend in retirement? Do you desire to leave money to children or grandchildren? Do you want to travel for the first 10 years of retirement and then pull back? What’s the plan if you encounter a Long-Term Care event?

If you start with basic assumptions on these, then every decision you need to make – such as when to claim social security – becomes more a game of numbers to determine which choice gives you the best odds of success on your unique plan.

If you’re still overwhelmed at the thought of having to answer all of those questions, seek the help of a Certified Financial Planner, who can leverage credentials and experience to guide you. Oftentimes, people can back into their answers after seeing and reacting to a few different scenarios of what could be.   

Copyright 2019 The Business Journal, Youngstown, Ohio.