Are you ready for retirement?


Are you ready for retirement? On this week’s Wiser Wealth Roundtable podcast, the team discusses four categories you should consider as you prepare for retirement. Those categories include considering what kind of lifestyle you want, managing cash flow, portfolio management and finding a purpose in retirement.

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Lifestyle in Retirement

A good financial advisor should discuss your goals for retirement and what type of lifestyle you want to have after you stop working. Some retirees will want to live modestly while others will want to travel and maintain an active lifestyle. This is the first consideration when thinking about how much you need to save for your golden years. Will Social Security and a small nest egg cover your lifestyle or will you need more money pending what you want to accomplish when retired?

Typically, monthly expenditures during retirement are more variable than during working years. Many new retirees enter retirement by traveling and being on the go. We call these the “go-go” years. During this time, retirees are spending more and monthly expenses vary widely. As we age and move out of the “go-go” years, we tend to slow down and spend less. At the end of life, spending typically peaks as health care costs rise. All of these phases should be taken into consideration when determining how much you will need to save in retirement funds.

Managing Cash Flow

Managing cash flow involves looking at income and expenses. When thinking about retirement, we recommend eliminating as much debt as possible before retirement to be able to spend your retirement income on experiences and not be burdened by monthly payments. In terms of income, most retires will draw Social Security, have income from a retirement portfolio and possibly have a pension. We recommend people delay taking Social Security payments until at least age 70 to maximize this benefit.

Portfolio Management

The next question to ask is “How much income can your portfolio generate in retirement?” During retirement, we no longer look at the portfolio as a growth engine, but as a way to pay out income. As a rule of thumb, we recommend your portfolio be able to pay out 4% per year. The key is to create a portfolio with a return stream that can match the expenditures of the retiree and handle inflation each year. We recommend retired clients have a cash bucket within the portfolio that covers expenses for two to three years.

Purpose in Retirement

After your career has ended, it is important to think about and consider what you will do with your time in retirement. What will be your purpose? It could be focused on family, travel, part-time work, picking up new hobby or volunteering your time with something you believe in. No matter what you decide, it is important to have a plan for how you will stay active in retirement.

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