As you prepare for your retirement, we know that although it is an exciting time, it can also be a bit nerve-wracking as you move from earning an income to drawing an income from your investments, pension, etc.
In this video, Kelley Doerksen, CFP® walks you through some of the steps you can take to feel more prepared and confident that you will have what you need to live comfortably, retire successfully and enjoy the wealth you have accumulated.
Watch the video here:
A large part of what we do when preparing financial plans for clients is helping to prepare for retirement of course; and although clients are excited to make the transition from working life to retirement, it also comes with some stress and concern related to whether or not you will have enough financially to do the things you want to do when retirement comes. It also can be a challenging period of time mentally, moving from the process of earning an income to drawing an income from your investments, pensions, and so forth. Even though a lot of clients might know factually by way of our financial planning, that they are going to be fully capable of retiring financially, and they might know intuitively that they are going to be able to retire comfortably, it still can be challenging.
One thing that we often recommend clients do is get a good understanding for themselves of what their expenses might look like; and this will help pair the financial plan really successfully with the goals and values that you as the client would like to see achieved over your retirement.
An easy way to start looking at your costs, first and foremost, is understanding what you are spending currently. We all have certain months of the year where we are going to spend a little bit more than usual, so assess your regular spending months – months that you do not have big events or parties or travel or so forth and get a good handle on what those regular costs look like. Understand your fixed expenses – your property taxes and utilities, and all of those things that you can understand are going to be fairly consistent from month to month.
Go forward from that and understand what it is that you might need to spend money on, or more importantly might want to spend money on throughout your retirement stage.
We do recommend that people quite literally take a walk through their homes prior to retirement. Assess for yourself what major expenses are going to be needed through your house, whether that is a new roof or a fence that needs to be replaced or updated. All of those large expenditures can and should be projected in your financial plan. Again, knowing what those might look like and an estimate of cost will help us determine whether or not the assets that you have accumulated are going to be sufficient to cover off those large expenses.
Another thing that you want to keep in mind is, oftentimes, people in the first few years of retirement or maybe just prior, will look at purchasing a vehicle – maybe it is the last vehicle you intend to purchase or own, and understanding what that cost might look like and how that would impact potentially drawing from your assets can be beneficial as well.
The most important part of understanding your retirement expenses is to try and get an assessment for yourself of the expenses that you are excited to spend money on.
Many people are going to put the most time into travel for example, in the first 10 years of their retirement. And so, understanding what that looks like for you, whether that is a number of small trips or a number of once in a lifetime experiences. We can work with those expenses; we can project them into your financial plan and you can walk away feeling confident that the dollars that you have accumulated are going to be able to provide you with your basic living expenses of course, but also most importantly, those need to do, want to do experiences throughout retirement that you have worked hard to save for and you want to be able to comfortably use your money for.
When planning for retirement, understanding your goals and your objectives and what you value is absolutely critical; and pairing those with the expenses that you would like to see for yourself is a really meaningful use of your time and helps us build a financial plan that is going to help you see that you can meet those needs comfortably, retire successfully, and enjoy the wealth that you have accumulated.
Learn more about our retirement planning services here.