Top 3 Financial Questions Leading into Retirement

I have a lot of conversations about retirement, and those conversations happen with all kinds of people–from clients our team has worked with for years to people in the Valley I’m meeting for the first time. And whether they’re only weeks away from riding off into the sunset or still several years out from the big day, the conversations tend to have a lot of common threads. 

Instead of sequestering that information, and limiting the sharing to meetings with clients and prospective clients, I thought it was time I put together a piece that captures those most-asked questions in one place.

Now, these questions represent a retirement starting point of sorts. It’s difficult (and not too compliance-friendly) to provide answers without knowing your situation. But I hope this can serve as a guide on your journey, and you can begin building a plan for how to answer them, and the countless other questions involved with retirement.

Let’s dive in.

Question 1: Deciding on How to Take Income

Once you retire, you get a monthly check and go about your life. It’s that simple. Or is it?

There seems to be this notion that retirement is as simple as flipping a switch. You make the decision to hang ’em up, and voila, you’re retired. But as a financial advisor who works with people in retirement and nearing retirement, I can assure you, there’s no need to feel like retirement is automatic and something that comes easily and naturally.

It’s a bit like parenting. There’s certainly a learning curve, and you shouldn’t feel scared to ask for help, even though it can be difficult, especially when it’s asking for help with money. 

This is particularly applicable for managing your money in retirement. It’s a whole lot different than managing your money during your working years. You knew what your paycheck would be during your career, and you knew what that translated to for your weekly or monthly budget.

But in retirement, you have choices. Lots of them. And a choice today can have lasting impacts for tomorrow and the days ahead. That carries over to how you get your money, too. You may have multiple retirement and investment accounts. Which one do you draw from at what time? There’s a whole lot more to unpack within this hurdle, so I’ll leave it at that for now. Just know that there is a delicate balance with managing and taking income in retirement, and it’s not something you need to figure out yourself, especially given the cost of making mistakes.

Question 2: Adjusting Your Portfolio for Changing Risk Appetite

This hurdle is a bit more straightforward. As you transition from saving money for retirement to spending your retirement savings, many people naturally shift in their appetite for risk. You may find you want to take more risks like skydiving or taking an international trip. And retirement is all about new experiences, so go for it. But I’m in this case, I’m referring to investment risk. 

When we’re in our working years, our time horizon for needing our retirement funds is years, or even decades, in the future. We can afford to take more risks because we have time to recover. Plus, we’re actively adding money (or should be adding money) to our retirement nest egg. But when we make the shift to spending it, we can’t afford to take big hits on that nest egg–or invest in ways that may result in big drops. Now, investments naturally go through cycles. As financial advisors, we can’t make guarantees of certain returns. That said, there are ways to build your investment portfolio in your retirement years that better protect your money. And that’s one of our core areas of focus for our clients.

Question 3: Planning to Get the Most Mileage from Your Money

At the very least, everyone needs their money to last as long as they do. But many of our clients are striving to have their money endure beyond their own lifetime, allowing them to pass money to the next generation or to their favorite charities. 

So how do you get the most out of your money? Not surprisingly, the first two points we’ve addressed have a large impact. And those are just two components of a broader financial plan. There are many unknowns in retirement, but a financial plan helps our clients visualize and understand how their money will go to work for them throughout retirement. We assess income, risk appetite, expenses, and a host of other things, and build a plan that intertwines those inputs with our clients’ goals and aspirations to give you a blueprint for the years to come. 

Question 4: Navigating Medical Coverage

Paying for health insurance and medical needs is quite the learning curve in our adult lives. Medical coverage in retirement is another learning curve in and of itself.

Wrapping Up

Do any of these financial hurdles that I just covered hit home for you? Is there one you had in mind as you were reading that I didn’t cover?

If we can help you plan for retirement, I’d encourage you to schedule a time to meet with me so I can get to know you and the goals you have.