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Retirement - What Do You Do Now?

| August 22, 2016
Retirement Planning

For many of us we only get the chance to retire one time. This means we definitely don’t want to mess it up. In today’s economy, this can be downright scary and sometimes feel impossible.

See if any of this sounds familiar: You decided you would like to retire and move to Colorado. You feared the current turmoil in the economy and the market; however, you knew you must keep up with inflation. So you placed your money at several financial institutions at which you buy CD’s, stocks, mutual funds, etc. You even held the majority of your assets in your savings account. You felt safer having your assets spread across multiple firms because you didn’t have all of your eggs in one basket and even though you had incurred severe losses on your prior investments, you felt they were safer sitting in cash. By the way…you didn’t ask anyone to look at your overall financial picture, because you felt confident your various advisors, brokers, bankers and insurance agents were giving you all of the information you needed.

Now it is a year later and you are in a complete state of confusion and cannot sleep at night. The cost of living in Colorado is enormous, inflation is at an all-time high and by the way…you are sick of the cold weather. You are completely disgusted with yourself and want to blame someone for not telling you to invest your cash into the market after seeing one of the biggest rebounds in market history. You are sure you are never going to have the assets you once had before the market crash. You are working harder than before you retired from trying to micro-manage all of your advisors, brokers, bankers and insurance agents – and don’t even want to mention tax season, which took you to a whole new level of relationship with your accountant and the IRS.

Although this is a completely fabricated scenario, similar stories happen more often than you know. We are all human and it’s easy to make decisions based on our emotions. This is why it is extremely important to work with someone emotionally unattached to you and your money. Had you worked with the right advisor, you might have heard these questions…

  • Have you spent much time in Colorado? – It would be a good idea to subscribe to the local newspaper and frequently visit the town’s website. Find out what the demographics are and what social events take place. Take a lengthy vacation during every season of the year. Take some time to explore the cost of living and taxes.
  • Do you have a tentative budget? - A budget allows people to see exactly what they are spending and where they are spending it, as well as provide a financial roadmap for the future. How do know what kind of income you need today, tomorrow or during retirement unless you put a pen and paper to it?
  • Do you know what resources will provide you what income during retirement? – Referred to as the “three-legged stool,” retirement income usually comes from 3 sources:
  • Social security- Know what your monthly benefit will be and more importantly “when” you should apply for you benefits. Get advice… not every situation is the same. Early application may mean smaller benefits.
  • Employer pensions- I cannot express to you the importance of getting help with your pension options. This is NOT a cut and dry area and should be taken very seriously. Remember, you only get 1 chance to retire…don’t mess it up.
  • Investments- A general rule of thumb is that your investments can provide you 4% income per year. However, just as it is with social security and employer pensions, this is a case-by-case decision that needs to be made with your advisor.
    • When will be the last day of your life? – For some retirees this might be 40, 50 or even 60 year away. It is crucial that your money outlives you. Work with an advisor who has a disciplined process in place to keep your risk exposure to a minimum, but provide you with market returns. Assume you need to receive 4% income off of your portfolio on an annual basis. The long-term average inflation from 1913- 2015 was 3.18%.1 This means your portfolio will need to average at the very least 7.18% annual growth.

As you know, your situation is unique and the information in this article is merely generic: just one more reason why it’s critical to have the right advisor take a look at your total financial picture in order to map out your distinct Life Plan. Moreover, retirement is about more than your money. You need an advisor who is willing to ask questions about, and provide solutions to, long-term care, legal documents, taxes, your family and much more. I have always said that I have not lived your Life, but we have lived your Life circumstances through the various experiences of our many clients over the years. Let experience help you through this critical Life event and allow you to sleep through the night.


  1. Average Annual Inflation by Decade. ã 2015