Don’t Retire – Rewire

The title of today’s blog is borrowed from a book of the same title written by Jeri Sedlar of the Conference Board.

When most people think about retirement, they only think about not working, they don’t really think about what they will do or how they will keep themselves busy.

Maybe you want to play golf, go fishing, cruise around the local lakes in your boat, or travel to some beautiful and exotic places in the world. But sooner or later, you will return home, then what are you going to do all day every day?

Talk with family and friends who have retired to hear what they did to prepare and what they struggled with the most after retiring. We always encourage people to seek godly counsel and this is one life event where you want to take time to seek advice from people who have been there.

One of the biggest impacts on your retirement plans is your budget because your financial situation may limit your ability to fulfill your retirement dreams. Some people may have enough money to do what they’d like, while many others are going to struggle to maintain their quality of life.

The challenge is that if you are not using a budget prior to retirement, you have no idea of how much you’ll spend during retirement. If you don’t have a budget and know exactly what you are spending now, you are only guessing at the amount of money you’ll need to live on in retirement.

Once you have a retirement budget, match your spending against the income stream available to you in retirement. When will you be eligible to take Social Security? Do you have a 401K or 403B and how much income will it provide? What about a pension plan or an IRA or other long term savings available to you?

Everyone understands the stock market rises and falls in cycles over the years. Yet when it comes time to plan for retirement, this basic fact can be very hard to deal with. If the market drops right after you retire, you could find yourself with a far smaller retirement nest egg than you anticipated. To mitigate the impact of a down market, it is important to reallocate your retirement savings and move to more conservative investments as you get closer and closer to retirement.

Ditch the debt to put yourself in the best possible position for retirement. Concentrate on paying off all credit card and consumer debt as quickly as possible so that you are not dragging your debt into retirement. In addition to consumer debt, work hard to get your home paid off before you retire.

When you are thinking about retirement, how do your plans tie into the plans your spouse has? Couples don’t always have the same ideas about anything, let alone retirement so it’s important to have open-ended discussions about what each of you expects in retirement. You need to take time to discuss and develop a plan that works for both of you.

Talk about everything, including your expectations for retirement, what your new schedule will look like, how you’re going to divvy up household tasks and how your identity is going to change. Compromise is created when each of you makes a list of expectations such as:

  • Downsizing, or moving to a new location to be near family
  • Places you would like to travel
  • Cultural or sporting events you want to attend
  • Exercise or sports activities you’d like to share
  • Volunteer work you will enjoy

Once you each develop this long list of possibilities for retirement go through it together noting what is the same on both lists and where the differences are. Have a give-and-take discussion where each of you compromises to some extent. You both need to have your own activities and you also need to spend time doing things together.

Leaving a job often leaves a void in a person’s life. If you’re like many would-be retirees, you’ll likely be retiring from something such as job or boss you hate, and not to something better.

Even if you are in a job you’ve come to dislike, work is a reason to get out of bed every day to feel useful and productive. Most people feel needed at work as they contribute to the purpose of the business where they work. So, when you stop working, what will compel you to get out of bed each morning?

Using your time in retirement wisely means figuring out your purpose during this season of life. Humans continue to thrive when they have a purpose and are contributing to something.

Retirement is a time when you can serve other people by making a worthwhile contribution to a greater good. Giving your time and talents to a worthy cause is one of the most fulfilling things you can do in life. There are an unlimited number of worthy causes that need volunteers to help achieve their mission. Explore something that you never had time to get involved in when you were working.

Retirement can be one-third of your adult life.  Having a purpose and being engaged is a sign of wellbeing. As you wind down your work, begin thinking about a cause that can become a passion. What talents and strengths do you have that will enable you to contribute in a meaningful way to a purpose that is close to your heart?

Retirement offers you the chance to do what you always wanted to do, and no longer focus on simply earning a living. Plan your retirement so you have a purpose for each and every day.

“Do nothing without deliberation; then once you have acted, have no regrets.” Sirach 32:19

Retirement Planning

barca-473854_1280If you are thinking about retirement, are you planning how you will spend your time or does retirement simply conjure up thoughts of not working? How will you fill your days when there is no backlog of projects on your desk, no meetings, no emails that absolutely have to be responded to immediately, no boss giving you deadlines and no need to leave the house most days?

What does retirement look like for you and your spouse? While you’ve been thinking about golfing and boating, is your spouse thinking about world travel or moving to a different city to be close to the grandkids? Couples don’t always have the same ideas about anything let alone how they will spend retirement.

When your dreams and plans for retirement are different, It’s time for some good old-fashioned negotiating! And remember this: Women tend to be gifted with a wonderfully sensitive intuition that is usually very accurate. Men tend to focus more objectively on the facts. The husband and the wife need each other to achieve the proper balance for a good decision. Many times the Lord communicates most clearly to the husband through his wife.

The husband and the wife should agree because they both will experience the consequences of the decision. Even if their choice proves to be disastrous, there are no grounds for an “I told you so” to drive a wedge in their relationship. For many people, the negotiations begin with a discussion of when to retire. One spouse may want or need to work a little longer while the other one is ready to call it quits. It’s important to talk, talk and then talk some more.

Talk about everything, including your expectations for retirement, your “want-to-do list” and your “need-to-do list.” Talk about what your new schedule will look like, how you’re going to divvy up tasks and how your identity is going to change. As you are going through this new stage and adapting to it, you have to use several basic social skills: Negotiate, compromise, take turns and share.

Here are some ideas for productive retirement discussions:

Each of you should create a list of categories and define what is important to you in retirement: Where do you want to live? How will you spend your days? Are you going to volunteer? What type of exercise will you do and how often? Are there any new hobbies you want to take up? Any new skills you want to learn? Are there sporting events or cultural activities you want to attend?

Once you each have your list, it will open the doors for more and more communication, sharing, compromise, agreement, and planning.

Many of the decisions are going to be based on your financial situation. Some people may have enough money to do what they’d like while many others are going to struggle to maintain their quality of life. Many people just think about various things that would be pleasurable, but they don’t sit down and calculate how much money it will take for them to do whatever it is that they are dreaming about.

There is another thing that people don’t plan for…and that’s life! What about the unforeseen circumstances? Sometimes, even when we have planned carefully, life just happens.

What if you have to leave your job sooner than expected? Corporate restructuring plans have a way of reducing the older employees and severance packages might not last as long as you would hope for. You will need to look at the income stream that is available to you and if it is enough to meet your needs.  After you have a handle on the money that is coming in and what you’re spending, the next step is to figure out a longer-term strategy to make ends meet on your new budget. If you have enough, you’re good to go. If not, you can look at some of the resources for retirees on limited incomes can use to help make ends meet until more typical retirement benefits become available.

What happens if you have to deal with a badly timed stock market drop? Everyone understands the stock market rises and falls in cycles over the years. Yet when it comes time to plan for retirement, this basic fact can be very hard to deal with. If the market drops right after you retire, you could find yourself with a far smaller retirement nest egg than you had expected. Easing back on your stock market exposure as you age can help insulate your assets from a falling market. Giving up some potential future growth and being slightly more conservative can offer a good solution to any unforeseen market moves that could put you in dire straits.

Retiring well takes effort, and dealing with unforeseen circumstances makes it even harder. Nevertheless, with some forethought, you can put yourself in the best position possible to deal with unexpected surprises and come out on top.

  1. Make sure you have a budget and know how much you are spending before you get to retirement.
  2. Make sure that you are saving for retirement, and not spending your disposable income on the next latest and greatest electronic gizmo.
  3. Concentrate on paying off all credit card and consumer debt as quickly as possible so that you are not taking this debt with you in retirement.
  4. Work hard to get your home paid off before you retire.
  5. Figure out how much money you will need to live on in retirement and calculate where that income is going to come from. Financial planners are very careful to try to keep you from withdrawing more than 4% per year from your savings. Know how much you will need and how much will be available from other sources such as pensions and Social Security. These other sources will help you to keep the withdrawals on your savings as low as possible.

The best time to start planning for retirement is now—even if you just started your first job. Sirach 31:19 tells us  “Do nothing without deliberation; then once you have acted, have no regrets.” You’ll have no regrets if you plan for retirement. Retiring with a plan and the funds to live that plan is a great blessing and a reward for a live well lived.  

Check out the retirement calculators on the Compass Catholic website: Retirement Calculators

Planning for Retirement: Part III

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Continuing our series on retirement planning, we’ve already touched on diversifying our investments to account for downturns in the market. We’ve made sure that we’re knowledgeable about extra expenses that might arise as a result of limited mobility or other physical limitations that come with age. Along those lines, we also need to be realistic about our health and medical concerns as they pertain to insurance and medication costs. It is important to understand this whether or not your age qualifies you for Medicare.

It seems inevitable that as we get older we might need to start incorporating some daily medications into our routine. Hopefully they will be fairly mild maintenance medications that help our body function at its best so we can maintain the normal functions of our daily life. But, even if that’s not the case, it’s important to take a look at the financial impact of maintaining our health with routine doctors visits and possibly medications.

It’s quite possible that we might end up with a number of different medications, which can be costly, even with insurance. Some insurance plans will give a reduced rate on medications if they are considered a maintenance drug and are refillable on a regular basis. For example, if the doctor is able to write the prescription for a three-month supply rather than one month at a time, not only is the savings on the medication usually pretty significant, but you save on trips to the pharmacy as well.

Generic drugs are another way to save on medications and many pharmacies now offer $4 refills on some of the most common ones. Some insurance plans may even offer zero co-pay on these generic drugs so it’s definitely worth talking to your doctor about them.

If a generic equivalent is not available for your medication, many doctors are not opposed to giving some samples. This can be of benefit for two reasons. First, you are given a chance to try the medicine to make sure it’s a good fit for you, but also you are reducing the overall cost by getting a few of them for free.

Even though medications can be expensive, more than likely our expenses in the medical area will come from the actual doctor visits. Our well visits might not be a huge expense since most insurance plans encourage well visits and cover a good portion of the cost, if not all of it. However, as we age and need to see various specialists for this or that, the medical bills may start to climb and we need to be prepared for that.

These suggestions can be applied whether you’re planning for retirement or not, of course. As with any other area of our budgets, it’s important to make wise choices and be the best stewards possible with what God has entrusted to us.

“If you obey the commandments of the Lord your God, which I enjoin on you today, loving him, and walking in his ways, and keeping his commandments…the Lord, your God, will bless you.”—Deuteronomy 30:16