Worry Free Retirement

Why Not!!! Being independent and worry free in your golden years is a goal most people would like to achieve. When I speak to retirees or retiree wannabes the number one concern they have is staying healthy. If you have your health you truly are wealthy. The second most important concern is ensuring that they have enough income to maintain their quality of life. Lastly most people would like to be able to pass on as much of an estate to their heirs as possible. 

 

Let’s face it we are retiring younger, living longer and have a much more active life style than previous generations of retirees. I’m always meeting folks at the golf course who are well into their upper 70s and regularly play 18 holes of golf. Staying active is certainly a key ingredient to staying healthy but medical costs do go up when you are retired. You’ll probably find that health insurance even basic Medicare and Medigap policies costs more than you paid for your employer’s group coverage. As you age, your unreimbursed medical costs are likely to soar. The average American age 65 and older lays out $931 annually on prescription medicines and 10% of retirees spend more than $1,500 a year. So be sure to plan for medical expenses appropriately.

The Bureau of Labor Statistics says that the more money your live on while you’re employed, the more you’re likely to spend when you retire. Bureau researchers found that retirees with household income of $70,000 or more spend as much in retirement as they did when they worked. So forget all of that advice about retiring on 2/3rds of your current income, for most folks it just isn’t so. You’re likely to spend more than ever on entertainment, hobbies and travel. Most folks already are spending less on work expenses with casual days and smaller dry cleaning bills.

The truth is some folks need less money after they retire and others need more. Your cash flow and budget is key to understanding your current spending habits and to be able to project your retirement needs. The proper mix of your investments, insuring that you are neither too conservative or too aggressive is very important to ensuring a worry free retirement. Most folks really do not have any idea of the risk/return potential of their total assets. You need to combine all of your separate accounts pull the assets together in a spread sheet and separate them into categories, define the risk/potential of each and balance accordingly. When I do this for clients it is usually the first time they have a true picture of the risk and growth characteristics of their total assets, a very appreciated and useful process.

I suggested retirees consider rebalancing their portfolios by reducing the exposure to stocks if they have become too large a portion of your overall portfolio. Evaluate your portfolio now to ensure your risk exposure is appropriate for your retirement plan. Remember you invest to ensure you achieve your life’s goals, you are not in a contest to “beat the market”.

To ensure a Worry Free retirement, evaluate your current and retirement lifestyle and project your monthly income needs, plan accordingly and have a trusted financial advisor review your situation on a regular basis, and one more thing, “don’t worry, be happy”