How Your Money Mentality Should Change in Retirement
Have you ever heard the phrase, “Investing is a marathon, not a sprint?”
Reaching retirement can feel like crossing the finish line at the end of a 30-, 40- or even 50-year-long marathon. Many people look forward to the endless vacation days and the rest and relaxation of retirement. Of course, if you talk with people in retirement, one thing you often learn is that they feel even busier than they did while they were working.
Although a life with no alarm clock is something we may dream about, the truth is that retirement can really disrupt how we view our money. The switch from receiving a regular paycheck to drawing down retirement accounts can be harder than we realize.
If you have recently retired (or nearing retirement), you’ve worked long enough to see a vastly transformed economy. There’s no doubt that the investment options of today have likely changed significantly versus when you started out as an investor years ago. Factors like offshored workforces and manufacturing, corporate mergers, and the transition from a manufacturing-based economy to one of service have changed the game.
With some public-sector and rare private business exceptions, defined benefit plans like pensions are largely extinct. This means the burden of saving for retirement has shifted to you. You likely already knew that.
The internet is full of articles that talking about saving for retirement, retirement investing strategies, and the importance of retirement planning. As your money mentality likely changed over the course of your career, we think it should also change when you retire.
Changing Your Money Mentality in Retirement
You used to ask yourself if you were saving enough money for retirement. Now you’ll have to ask yourself how long you need that money to last.
You used to set retirement savings goals. Now you should consider budget and spending goals to maintain your desired lifestyle.
You used to optimize your portfolio to reflect your growth needs, risk tolerance, and risk capacity. Now that you’re retired, you may need to look at dips in the market and other risks in an entirely different way.
You (probably) used to work full-time for your primary source of income. Now, luckily, you have a lot more flexibility. Do you want to work part-time? Consult? Or do you want to pursue a retirement career that reflects one of your passions?
Retirement Mindset Means More Than Just Money
When you think about it, suddenly moving from working full-time to being retired full-time can be a real shock to your system. Although it may sound great in theory, the truth is that we’re creatures of habit—and we don’t always react well to quick and dramatic changes. Some employers will allow you to ease into retirement by gradually shortening your workweek over a year or a couple of years. This is called a phased retirement, and it can be a great way to get your toes wet before diving right into full retirement.
Use your days off to discover new hobbies, start volunteering, and begin developing a new routine you can expand on throughout retirement. You may also have a chance to try different spending plans to see what feels most comfortable for your retirement income budget.
If your current place of employment does not offer a gradual retirement option, you could search for a part-time job, perhaps something that’s more laid back or of interest to you. Easing into retirement not only helps reduce the shock but also can be a great way to continue earning income without committing to a full workweek.
Everybody Needs a Helping Hand Sometimes
If you’re struggling with your money mentality or the transition to retirement, there are things you can do to help. For many, this starts with making sure they’re aligned with their passions—friends, family, travel, hobbies, volunteering and so much more. Some look for role models, people like them who are wonderful examples of thriving in retirement. Others get help from their financial professionals to set and meet their retirement goals.
We believe that retirement planning should begin many years prior to making the leap. There are many different decisions to think about, and there can be many life changes that you may want to consider. Retirement can be a wonderful season of life. Don’t leave it to chance. Let’s make a plan.
This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.