The Road into Retirement: Take Your Own Path

The concept of retirement has changed significantly from prior generations. Aside from living longer as a population, many of us view retirement as a stepping stone to something great, as opposed to seeing it as an ending point.

I work with a number of pre-retirees who are working toward retirement. Nearly all share the thought, through differing descriptions, that continuing to work provides satisfaction. While one career is ending as traditional retirement, many more might be just starting. This new work might entail watching grandchildren, part-time adventures alongside similar demographic co- workers or much younger ones. Some work helps others in need, as in charitable causes. As one heads down the retirement trail, these post-initial retirement pieces need to be put together.

Budgeting comes into play for retirement. Many will look at monthly expenses and then see if they can afford to retire. I like to look at trends. Instead of looking at short-term expenses, look at yearly expenses. For example, consider a recurring monthly bill of $ 150. Annualized, that’s $ 1,800. Looking at expenses this way helps prevent the post-retirement issue of significantly underestimating expenses.

Even the most thoroughly vetted budgets need flexibility. Emergencies happen. Opportunities happen. A budget needs to breath – to expand and contract within certain parameters.

As retirement planning and enjoyment comes to fruition, most realize any cookie-cutter numbers about percentages and rules of thumb truly are simple benchmarks.

Within the income side of the equation, there may be many or a modest number of sources. One item that seems to creep up quite often is a forgotten retirement account or pension from some long-lost job. These can be significant windfalls.

As we enter the true “serious” retirement planning phase, it becomes increasingly important that all assets are coordinated, accounted for, and earmarked toward future cash flows. For example, a relatively early retiree may be able to access a 401k plan without penalty prior to age 59 ½. That’s a win for some. Then, at 59 ½, they can access IRA funds. Social security at 62 comes at a price that is worthwhile for some, but not for others. The eventual required minimum distributions for those 70 ½ or older can be a massive part of a coordinated cash flow effort.

Every client situation is different because our circumstances, goals, emotions, and risk tolerance vary. So, yes, rules of thumb are road markers along our journey.

Then there are the investing decisions to be made with retirement assets. Like the retirement budget, investing through retirement won’t be a stand-still approach. I am working on client required minimum distributions (RMD) this month. Stock markets have risen in the past year.

So, for many, the RMDs will be a chance to use gains, rebalance portfolios, and generate income based on market performance. That’s probably about the best scenario, but, there will be other times that flatten this out.

The point is that investing in retirement needs to be flexible based on needs. If one spouse lives to 100, a portion should be invested to hedge against inflation. Perhaps interest rates begin to rise significantly over the next decade. That gives us a whole new avenue to address with client portfolios.

Today’s world isn’t simple enough to ignore patterns and trends within investing. In fact, over the past 10 years, we’ve seen more change within the investing world than in the 30 years prior. Perhaps that is where professional guidance comes into play. Here’s my take on that: professional guidance doesn’t start at a free lunch or free dinner seminar. Professional guidance comes from a sense of comfort with your advisor, where you know they are looking out for your best interest only.

Fee-only is my preference as it is transparent and the advisor must operate in your best interest only, put all fees/costs in writing, and look out for you.

Please know the one area where you do not want to be flexible is buying insurance products as your retirement planning vehicle. Indexed and variable annuities aren’t in your best interest.

The new retiree should be concerned about who the next person up will be if their advisor retires. Experience is key as is future longevity. When you look at trends in the industry, the average advisor is literally on the doorstep of retirement. I figure I’ve got 20 years of full time working and then transitioning slowly to full retirement. I think that is incredibly important for clients to know so as they age into retirement, they aren’t faced with what could be a significant upheaval.

Success in retirement comes down to planning with flexibility. This allows for peace of mind, fewer regrets, and a focus forward.

Ryan Fox, partner with Huston-Fox Financial Advisory, in Gettysburg and Hanover, can be reached at 717-398-2040 or

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