Reaching retirement can feel like crossing the finish line at the end of a 30-, 40- or even 50-year-long marathon. Therefore, many of us look forward to the endless vacation days and the rest and relaxation of retirement. Although a life with no alarm clock is something we dream about, the truth is that retirement really throws a wrench in how we view our money, and the switch from receiving structured, employment-driven income to drawing down investment accounts can be harder than we realize.
If you’re retired (or nearing retirement), you’ve worked long enough to see a vastly transformed economy. Factors like offshored workforces and manufacturing, corporate acquisitions, and the transition from a manufacturing-based economy to one of service, information and technology-based has fundamentally changed employment dynamics.
With some public-sector and rare private business exceptions, defined benefit plans like pensions have gone the way of the dinosaur. This means the burden of saving for retirement has shifted to you. And just as your money mentality has changed over the course of your career, so too should it changed when you retire.
Changing Your Money Mentality in Retirement
You used to ask yourself if you were saving enough money for retirement. Now you’ll have to ask yourself how long you need that money to last for both of you and your partner.
You used to set retirement saving goals. Now you look at your money in an entirely different way, and your goal is to set budget goals that makes sense for your lifestyle.
You used to optimized your portfolio to reflect your growth needs and risk capacity. Now that you’re retired, you may look at dips in the market and other risks in an entirely different way.
You (probably) used to work full-time for your primary source of income. Now, luckily, you have a lot more flexibility. Do you want to work part-time? Consult? Or do you want to pursue a retirement career that reflects one of your passions?
Retirement Mindset Means More Than Just Money
When you think about it, suddenly moving from working 40 hours a week to zero can be a real shock to your system. Although it may sound great in theory, the truth is that we’re creatures of habit -and we don’t always react well to quick and dramatic changes. Some employers will allow you to ease into retirement by gradually shortening your workweek over a year or a couple of years. This can be a great way to get your toes wet before diving right into full retirement. Use your days off to discover new hobbies, start volunteering, meet with friends and begin developing a new routine you can expand on throughout retirement.
If your current place of employment does not offer a gradual retirement option, you could search for a part-time job, perhaps something that’s more laid back or of interest to you. Easing into retirement not only helps reduce the shock but also can be a great way to continue earning income without committing to a full workweek.
Everybody Needs a Helping Hand Sometimes
If you’re struggling with your money mentality, there are things you can do to help. For many, this starts with making sure they’re aligned with their passions -friends, family, travel, hobbies, volunteering and so much more. Some look for role models, people like them who are wonderful examples of thriving in retirement. Others get help from their financial professionals to set and meet their retirement goals.
Investment Advisory Services offered through Retirement Wealth Advisors, LLC (RWA) an SEC Registered Investment Advisor. MOKAN Wealth Management and RWA are not affiliated. Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. Past performance does not guarantee future results. Consult your financial professional before making any investment decision.
This information is designed to provide general information on the subjects covered, it is not, however, intended to provide specific legal or tax advice and cannot be used to avoid tax penalties or to promote, market, or recommend any tax plan or arrangement. Please note that MOKAN Wealth Management and its affiliates do not give legal or tax advice. You are encouraged to consult your tax advisor or attorney.