Adjusting Your Money Mentality As You Near Retirement
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 optimally drawing down investment accounts can be much harder than we realize.
If you’re retired (thinking seriously about 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 change both as you approach and 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.
You used to set retirement savings goals. Now you look at your money in an entirely different way, and your goal is to set budget goals that make sense for your lifestyle.
You used to optimize 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? Maybe you just want to relax in retirement.
Retirement Mindset Means More Than Just Money
When you think about it, suddenly moving from busy, activity-filled, workdays to no work responsibility 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 occupations will allow you an opportunity 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. Consider using 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.
Consider seeking help
If you’re struggling with your money mentality, there are things you can still do to help ensure that you thrive in retirement. One step would be to establish a comprehensive retirement financial plan with a professional to ensure your money is prudently aligned with your risk capacity and retirement goals.
This content is developed from sources believed to be providing accurate information, and provided by Meenes Wealth Partners. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.