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Thriving in Retirement—What Does it Mean?

By Barbara Clemons
LPL Financial Planner, ESL Investment Services, LLC

When the time comes to plan for retirement, many people think about saving enough money to live comfortably. As simple as that may sound, planning for retirement really involves much more, including and beyond the realm of finances. In my opinion, a successful retirement can mean something different to everyone. To strategize for your particular goals, you’ll need to consider a number of factors including the following:

Lifestyle

First, think outside the financial box by picturing your ideal retirement life. Does it involve spending more time with friends and family, doing more of the activities you love, or volunteering? Think about everything you may have gotten from your job besides a paycheck (such as social activity, mental stimulation, and a sense of purpose), and decide how you’ll get these things during retirement. Next, picture where you’d like to live during retirement. Will you remain in New York, be a “snow bird,” or move away completely? What about purchasing a vacation home? While you plan for a long and happy retirement, ask yourself the following question to help you prioritize your retirement goals: if you knew you had only one year to live, what would you do or regret not doing?

Expenses and Income Strategies

Once you’ve thought about the main components of a successful retirement, you can then take the next step of planning the financial side. Start with asking yourself what your lifestyle and spending habits are now and build on that with what you expect them to be. The general expenses you have now, such as groceries, utilities, taxes, travel, and car-related expenses, will continue into retirement. There are some new expenses to plan for as well (such as healthcare costs, a big trip, or unexpected expenses like home repairs). As stated earlier, relocation or purchasing a vacation home may be in your plans and with that, you’ll need to consider housing costs and taxes.

Once you plan for what your expenses will be, you can then plan for the income that will cover these expenses. If you’ve been fortunate enough to have a pension, you’ll want to weigh the different options you have with that, such as receiving a lump sum vs. a monthly pension. Another thing to decide is when to take Social Security to maximize your benefit. There is no universal answer on whether it is best to take Social Security at 62, full retirement age, or age 70, as it depends on your individual situation. You’ll also want to plan in advance if taking a part-time job is right for you, since that will impact your other areas of income planning such as Social Security and income taxation.

Investment Planning

Investments are another key area to include in your retirement planning. You may look at investments differently depending on how much guaranteed income you expect to receive (typically Social Security and pensions) relative to your fixed and necessary expenses. The more you expect your guaranteed income to cover the fixed expenses, the more comfortable you might be with market fluctuations and the resulting variable income. After considering this, along with your portfolio growth goal, you will be more prepared to determine what vehicle or vehicles will meet your particular needs.

Risk Management

Just as you can plan for all the positive things you hope for in retirement, you should consider the risk factors that you can mitigate by being prepared. One risk we can work with you to manage is market volatility, which can be especially challenging during the early years of retirement. Medical costs, home health care and/or nursing home care can also put a strain on finances for those who aren’t prepared for them. Therefore, you’ll want to look into insurance options such as a Medigap policy or Medicare Advantage plans and Long Term Care Insurance. Premature death or even living “too long” are other important factors to consider. For example, in the event of the premature death of one spouse, will the other be impacted by losing sources of income? If so, life insurance may be part of your retirement plan. And, what is the possibility that you’d outlive your resources?

Legacy Planning

While planning, it’s also important to think about what you’d like to leave behind as your legacy. For example, although ESL Investment Services, LLC, cannot give tax advice, consider the impact of taxes on the assets you’ll leave to your heirs and charitable institutions. Should you leave some of these assets in the form of a trust? You’ll also want to have in order important documents (such as your will) and key people (such as your executor, trustees, and beneficiaries).

In Summary

Overall, remember that thriving in retirement is multi-faceted, and it is never too early or too late to start planning. Don’t feel overwhelmed or view your retirement as life’s curtain call. Instead, picture retirement as your encore performance. A performance that you worked so hard to choreograph, and now get to enjoy. To work toward more confidence in your retirement plan, we encourage you to schedule an appointment with an ESL Investment Services representative by calling 585.339.4475.

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.