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Getting Ready to Retire or In Retirement - Three Most Important Questions That Need to Be Answered

January 14, 2022

As I write this thoughts of Leonardo DaVinci and Isaac Newton run through my head. Both had commented that we need to make things as simple as possible but not too simple. I often try to boil things down for myself. For instance, to me retirement for most of us is giving up income for a time. Most folks are willing to give up more income from working for increased time to do things they love.

Therefore as you think of getting ready to retire or you are in retirement there are three main questions you need to answer and the sequence of them is crucial.

(1) How am I going to spend my time?

(2) How much is it going to cost?

(3) Do I have the financial resources to support it? Pretty simple, right?

(1) How am I going to spend my time? We have spent a lot of time over last several years talking about life centered planning and return on life. For us helping guide our clients, team, and partners to be the heroes of their lives and journey and live a life of meaning and purpose is our mission. We are here on earth a relatively short period of time. We need to make the most of the time we have. For most of us meaning and purpose is usually focused on having loving and fulfilling relationships, positive experiences (often with the people we love and cherish), deeper spiritual or faith practices, and having meaningful work and use of our time. It is these life goals that we have to really explore and be honest with ourselves. For a lot of folks they are happy with their lifestyle with loved ones and friends and they just want to keep doing this as they think of transitioning from work to retirement.

(2) How much is my lifestyle going to cost? Once we know how we want to spend our time, we have to determine how much it is going to cost. If you would have done a planning session with us 5 to 10 years ago, we hardly ever talked about budgeting and spending. Not because we didn’t believe in it but we know for a lot of folks budgeting elicits strong negative emotions. Budgeting can be tedious and evoke so many negative feelings around money. However, as we have specialized in retirement income planning, we realized we would be doing you a disservice if we did not talk about how much your lifestyle is going to cost. If you hate the traditional budgeting method, we do have an easier and less tedious method called the income gap assessment. Ask one of your planners and they can walk you through it.

This is so important to do this. As we work with clients there spending needs vary widely. Some folks have very modest spending needs and are very content engaging activities that have very low costs. On the other hand, we have folks that may want to do a lot of things and have experiences with their family members or bucket list items during the compressed period of the go-go period of retirement where they can be active.

A key note on this. We do not have to be precise in this. We just have to have a basic range. It is hard to predict what our expenses are over a year with 100% accuracy much less the potential 25 to 35 years of retirement. There are too many variables.

(3) Do I have the financial resources to support it? This is where we come into play as a guide in your journey who helps you see if what you came up with in answer 2 is within the realm of possibility or do adjustments need to be made? Recently, I had a conversation with a client who said she saw an ad from another financial professional who said that everyone needs $2 million to even think about retiring. I get so angered by these things because it is essentially selling based on fear for most people because the professional says you don’t have it and I can help you get it.

The reality is an arbitrary number like that is meaningless. The reason is (1) the answer to question 2. How much does your lifestyle cost? We have a lot of very happy and satisfied clients who are retired who live modestly and within their means. They have a lot of meaning and purpose. (2) the second reason is people have different levels of guaranteed income from sources like Social Security and pensions. We work with a lot of public sector employees who between their Social Security and pensions are able to fund 100% of their lifestyle. Their portfolios supplement their income. We also have clients who derive a decent amount of income from rental income from real estate. 

However, for a lot of folks particularly where both spouses were in the private sector and may not have pensions, their portfolios provide passive income (income one gets without working) that is majority of their retirement income needs. Our approach is that we want to provide reliable and consistent retirement income that typically will cover 25 to 35 years. 

In the end, we look at all the financial sources and determine what the long-term sustainable income is. For couples, we have a contingency plan on how income will be affected with the loss of one spouse.

There you have it. The 3 questions you need to answer as you contemplate retirement. If you are retired, we need to constantly make sure we are on track. We are here to help you. If you have any questions or want to walk through this process on what we use our bucket planning process where we go through discover, design, deliver, and dedicate, please reach out to Melissa Anne at or call 410-838-2992 to meet with our professionals.