That’s not a trick title. This article isn’t about saving for a financially secure retirement; it’s about spending your retirement. It’s about transitioning from a saver to a spender financially and mentally and how you’ll spend your time as you move from work to retirement.
Transitioning from a saver to a spender can be nerve-wracking. Rather than looking at how much you’ve contributed to your retirement account you now look at how much you’re taking out of it. Think you’re concerned about market swings now? Wait until you’re counting on your portfolio to maintain your standard of living! That’s why Bedel Financial provided you with a financial security analysis which projects how much you can comfortably spend in all market conditions.
Three Stages of Retirement Spending
How much will you spend in retirement? The answer to that question is different for everyone. However, we find most retirees spend the same amount they spent prior to retirement. That’s why we provide you with a financial security analysis—to help ensure your available savings cover your current spending patterns.
I don’t know who coined the three stages of retirement (the Go-Go years, the Slow-Go years and the No-Go years), but in my years of financial practice it’s been accurate.
In the Go-Go years, the first stage of retirement, you’re active and ready to pursue the things you’ve always wanted to do but didn’t have the time. You may travel more, indulge your passions and hobbies, play with the grandchildren and remodel your home.
In the second stage, the Slow-Go years, your energy levels decrease. You don’t travel as much and you favor hobbies that keep you closer to home. Maybe you start thinking about downsizing. Typically, spending decreases in this stage, but you still need to account for inflation.
In the No-Go years, your world gets smaller and your expenses decrease with the possible exception of medical and long-term care costs.
Accessing Your Money
While working, you probably received a paycheck at specific intervals and felt comfortable knowing you’d receive a set amount at a certain time. Moreover, many of your bills come at the same time of the month. Not surprisingly, we’ve found most people budget on the basis of monthly income. So, when you retire, we’ll send a set amount from your investment account to your checking account every month.
But everyone’s needs are different. Some people like quarterly amounts. And everyone has occasional expenses, whether they’re anticipated like a vacation or they catch you by surprise like a major home repair! Those things happen and we can get the funds to you quickly and efficiently.
Filling the Time Gap
So, what will you do all day long when you’re retired? You’ll probably travel more often and play more rounds of golf, but that’s only a beginning. You’ll need a plan for how to fill your days. You’ve probably been on a similar schedule since kindergarten: Get up, go to school/work, come home, sleep and repeat. So, what’s the new “work” that will fill that gap in your retirement days?
For some, it’s actually a new job. Many seniors “retire” to another job that has always interested them. Others opt to work part-time in a field similar to their full-time jobs. A new job is a great way to transition to retirement. It provides a continued income stream, and may offer medical benefits, which is a nice perk for retirees who aren’t yet age 65.
Maybe your new work is volunteering for a favorite charity, joining a gardening club or participating in a book club. Whatever it is, it should be something that keeps you engaged socially and mentally.
We spend so much time looking forward to retirement and preparing for it financially that we don’t know what to do when we get there. Don’t just plan on taking European vacations and hitting the links, plan what your daily life will look like. Once you have that down, you’ll be set. Now, let’s Go-Go!