Never Fear

There is no doubt that the definition of retirement has been changing for years now. Longer life expectancies, increased costs for just about everything, and shrinking retirement benefits are just a few of the variables involved in retirement’s metamorphosis. The promise of ever-increasing demands for an ever-shrinking pool of resources is a cause for fear in many.

All too often, this fear causes people to approach retirement as if they are jumping off a cliff. They aren’t certain if they have saved enough. They look at their portfolios and hope that it will provide the life they envision. Failing that, they convince themselves that they will simply fit whatever income they earn year in and year out.

This fear, fear of the unknown, fear of doing without, fear of adhering to a budget for the first time is what drives this decision to not make decisions, or worse, to fall prey to any number of the slick sales approaches that inundate your mailbox and television daily, “guaranteeing” to make it a smooth ride.

As is true with just about everything else in life, the known is better than the unknown and life doesn’t come with guarantees. Sitting down and mapping out your goals for life after retirement, determining the costs involved and how your portfolio can help you accomplish those goals is the first step. Working with an independent advisor held to a fiduciary standard, you can learn whether or not your goals are attainable and what steps you might take to increase your chances of success.

The earlier you begin to plan, the better. For example, you can test drive your retirement budget by adhering to it for a year or two before you retire. This will allow you to see any cracks in the foundation and make adjustments as needed. If you’ve put off the planning or are already retired, it’s still a good idea to make sure you’re on track. Don’t continue to procrastinate out of guilt for putting it off, just make today the day you take action.

Another term that grabbed some headlines after a study done by Vanguard in early 2007 is downshifting. This involves working with your employer to adjust your current position to part-time, or by finding other part-time work that interests you before full-fledged retirement. This was a practice growing in popularity near the market’s peak and should be considered even more seriously in 2010. It is both an attractive way to make this transition while still earning some income and a way to begin to emotionally make the dramatic shift from a bustling professional life to one more focused on your personal goals.

The bottom line is that the security provided by having a solid plan in place cannot be overstated. It is an invaluable tool to maintain solid financial footing, and your sanity, as you wake up each day without the burden or fear of the unknown. Imagine being able to turn off the constant barrage of information on the “crisis du jour” knowing that, regardless of the short term outcome, you have a plan that will allow your money to outlive you, not the other way around.

By Chip Workman, CFP®
cworkman@taaginc.com
www.taaginc.com