Retirement is a goal many Americans are eagerly looking forward to achieving, and why not?
After all, you’ve worked and planned for the time when you will be able to spend your time
more on your terms, occupying yourself with the people and activities that are most
important to you. You should look forward to it—you’ve earned it!
You are part of a significant crowd: about 10,000 Baby Boomers (born 1948–1964) are hitting
retirement age each day between now and the year 2030. In 2024 alone, about 4.1 million reached the retirement milestone! In “social media” terms, retirement is definitely trending!
But, like any important life transition, retirement requires some thinking and planning.
Naturally, you’ve probably been focused on accumulating funds in your various retirement
accounts and checking up on your Social Security and pension options as you work on securing
the income stream you’ll need to finance your retirement lifestyle. But there are a lot of non-
financial transitions involved, too, and some of these can be at least as important as the
logistics around your investments and income. We’ve written many times about the value of
understanding your “why” in retirement: having a good grasp on what you want to achieve in
order to keep your life fulfilling and meaningful. It’s also worth remembering that in
retirement, the familiar landmarks that you’ve used to organize your time and efforts are likely
to be gone, replaced by a different landscape.
So, especially in the first year of retirement, you can probably benefit from acquiring some new
assumptions, routines, and landmarks. Remember, you need to think about what you’re looking
forward to, not just what you’re leaving behind. Your personal priorities, goals, values, and
resources should be used to guide you into a retirement lifestyle that is meaningful and
satisfying. And the first year of retirement is when you need to start putting these guidelines
into action.
The Right Questions
One way to begin getting a handle on what you want your retirement to look like is to ask
yourself some “thought questions.” Take some time to think through your own answers to
questions like these:
- When you picture yourself one, two, or three years into retirement, what do you see?
- Does the prospect of “all that time” on your hands make you feel eager—or anxious?
- What are you doing right now that gives you the most enjoyment or significance? Will
retirement change that? If so—how? - Try to picture yourself twenty years from now, looking back on your life. What would
you like to be known for? What’s the one thing you’d like to have accomplished? - Does your checkbook or account history give any clues about what is most important to
you? Will those things still be important during retirement? - What’s your favorite way to spend time? Will that still be something you’re interested in
after retirement? - Is “giving” important to you? If so, how do you do it? Will you want to continue
doing it when you retire? Will “giving” in retirement involve investments of time,
money, or both? - Can you think of someone who, in your opinion, really “nailed it” in retirement? What
are the keys to their success? Or, can you visualize someone who seemed less happy
and fulfilled after they retired? What can you learn from them?
You may be able to think of other or additional questions as you contemplate what you want your retirement lifestyle to look like. This is also an excellent topic to share with your financial advisor, who can help you think through the financial implications of your answers in the context of their knowledge of your overall situation. Finding your own answers to questions like these can help you with developing your approach to your first year of retirement.
The Finances
Naturally, you’ll want to think through the financial aspects of your first year in retirement,
also. After all, this first year will do much to set the tone for everything that follows, so
developing good habits and perceptions now can lead to less stress later.
Smart withdrawal strategies.
Retirement is a time when you begin “drawing” on the savings you’ve accumulated during your working years. But there are lots of ways to structure your withdrawals, and some variables that you should be aware of, especially in the early years of retirement. For example, if the market is trending lower, early in your retirement, you should be careful about pulling funds out of accounts funded by assets that are falling in value. When you “draw” from an account that is also losing market value, it creates a “double whammy”: your available assets are shrinking both because of lower market pricing and because they are being spent. Further, when the market begins to recover, you’ll have fewer assets available to benefit from rising prices. If this becomes a concern in the early years of retirement, you could benefit by pulling income from assets that are less affected by market conditions, such as cash and perhaps passive income from real estate. This is also where pensions and Social Security can be very beneficial, since these sources are not typically affected by market movements. You may also have various “buckets”: tax-exempt, tax-favored, and taxable. Your financial advisor can help you devise a tax-efficient withdrawal plan that utilizes these “buckets” in the most beneficial way.
Fine-tune your budget.
Since you no longer have that paycheck showing up every two weeks, monthly, or whatever other interval you were accustomed to when you were working, this first year of retirement is the time to carefully monitor your spending and cash flow patterns. Are there adjustments that need to be made? Are there areas where you need to cut back? Did one set of grandkids move farther away, necessitating a bigger travel budget than you initially anticipated? These early years of retirement are the time to make these adjustments to your spending plan so that you can settle in to a more predictable routine.
At Mathis Wealth Management, we believe that retirement is a time to be eagerly anticipated
and enjoyed. That’s why we work with clients to develop strategies for retirement saving that
reflect each client’s unique needs and resources. To find out more about our retirement
planning services, please visit our website.
