Updated: Feb 17
When you picture the chapter of your life in retirement, what do you see?
For some, it will be a time to travel and create memories with family. For others, it will be a time to start a new business or begin a charitable endeavor.
Whatever you visualize for your retirement, writing it down and formatting a plan is your first step to making it a reality. Begin planning by answering the following 6 questions.
1. What do you absolutely need to accomplish?
If you could only get four or five things done in retirement, what would they be? Answering this question might lead you to compile a “short list” of life goals, and while they may have nothing to do with money, the financial decisions you make may be integral to pursuing them.
Time is your most valuable asset.
2. What would revitalize you?
Some people retire with no particular goals at all. After weeks or months of respite, ambition may return. They start to think about what hobbies, second careers, new business ventures, or adventures they could embark on to make these years special. Others have known for decades what dreams they will follow. And yet, when the time to follow them arrives, those dreams may unfold differently than anticipated and may even be supplanted by new ones.
In retirement, time is really your most valuable asset. Do you want to improve your community through volunteering or develop a new hobby like gardening? With more free time and opportunity for reflection, you might find your old dreams giving way to new ones.
3. Who will you share your time with?
Here is another profound choice you get to make in retirement. The common answer to this question for many retirees would be “family.” Today, we have nuclear families, blended families, extended families; some people think of their friends or their employees as family.
You may decide that a second career to serve the community or a cause you care about is in your future. Or, you may have a nagging itch to start a small business. It’s important to consider how you will balance the risks and rewards of a business during retirement.
4. How much do you anticipate spending?
We can’t control all retirement expenses, but we can manage some of them. The thought of downsizing your home may have crossed your mind. One benefit of downsizing is that it can potentially lead to no mortgage or a more manageable mortgage payment.
Pro-Tip: Determine your retirement income replacement ratio. You may need anywhere from 55%–80% of your current income annually in retirement. Consider the following 3 questions:
5. Could you leave a legacy?
Many of us would like to give our kids or grandkids a good start in life, but leaving an inheritance can be trickier than many realize. Tax laws are constantly changing, and the strategies that worked years ago may have more limited benefits today.
Keep in mind this article is for informational purposes only and is not a replacement for real-life advice, so make sure to consult your tax or legal professional before modifying any part of your overall estate strategy.
Pro-Tip: If you’d like future generations to enjoy a common estate, like the family home or a vacation home – consider having the proceeds from your life insurance policy fund this legacy property.
6. How are you preparing for retirement?
This is the most important question of all. If you feel you need to prepare more for the future or reexamine your existing strategy in light of recent changes or unfulfilled passions in your life, conferring with a financial professional experienced in retirement planning may offer some guidance.
Evaluate your answers to the following questions:
Are you comfortable with your progress towards retirement? How about helping future generations meet their financial goals? If you have more than $2 million saved and need help from a wealth manager, the Peak Wealth Planning team can assist.
Peak Wealth Planning meets with clients in Champaign and Chicago, Illinois, as well as in Colorado near Denver, Winter Park, and Fraser. Peak Wealth Planning specializes in helping high-net worth individuals and families plan for the future.
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About the Author
Peter Newman is a Chartered Financial Advisor (CFA) and president of Peak Wealth Planning. He works with individuals nationwide that have accumulated wealth through company stock, ESOP shares, real estate, or running a business. Peter applies his unique background to help clients achieve their specific goals and enjoy peace of mind.
Peak Wealth Planning provides concierge services to meet your wealth management needs. Services include: financial planning, investment management, esop diversification, retirement income, insurance, and estate planning advice. Peak Wealth Planning is a fee-based financial advisor based in Champaign, Illinois, and Fraser, Colorado.