At Christy Capital Management, we work with hundreds of people every year.
Want to guess what question they ask us more than any other?
That’s right. It’s some variation of “Am I financially ready to retire?”
- “Can I afford to retire and stop working?”
- “Do I have enough assets to provide a comfortable retirement?”
- “Will my money last–at least as long as I do?”
That’s the first question to ask when thinking about retirement.
A second, equally important one, is “Am I emotionally ready to retire?”
For retirement to be a wise choice, you need two “yeses.” It needs to be the right move financially and emotionally.
But what if you can only answer one of those questions in the affirmative?
What if, emotionally, you’ve been ready to retire for years, but from a financial standpoint, you’re not really prepared?
What do you do then?
When you’re not financially ready to retire
If that’s you, then here are some options you might consider.
- You might decided to delay your retirement.
Keep working. Keep punching the clock. And as you do…
- You may decide to make saving a bigger priority.
Whether this also means becoming a more aggressive investor depends on a number of variables (i.e., market conditions, your age, your appetite for risk, etc.).
As always, it’s imperative to discuss such things with an experienced and trusted financial advisor.
- You may consider working in retirement.
Some people create a new income stream. Could you find an enjoyable part-time job in retirement that would help meet your expenses?
Could you start a new business?
Not a lot of people choose this option. Most would rather stay in their careers until they can quit working for good. But this arrangement can and does work for some.
- You may decide to cut your expenses.
We’ve had clients that needed to retire for emotional or physical reasons. To make it work financially, they downsized.
By selling a large home with lots of equity and buying something smaller, they were able to eliminate a house payment and lower utility costs and upkeep.
- You may consider changing your expectations for retirement.
Each person’s situation is different. This is why anyone contemplating retirement needs to sit down with a skilled planner to discuss fiscal realties.
What are your needs? Expectations? Hopes? Dreams?
We like to ask our clients questions like:
- What’s the difference–if any–between your current income, and the income you realistically anticipate in retirement?
- How are you going to make up that difference?
The answers we usually hear are things like “Well, I won’t be spending money on commuting and car expenses…we won’t go out or eat out so much…I won’t get my nails done so often…I won’t need to dress up for work.”
We usually remind folks, “You do still plan on traveling some, don’t you? Hopefully, you’re not going to sit in your house all day every day and watch TV. That doesn’t sound like a very successful or satisfying retirement. And you’re not going to walk around naked, are you? You’ll still need clothes, right?”
In re-evaluating your retirement expectations, you have to be real. This is the hard part.
You’ve got to create a retirement spending plan (i.e. budget) that’s liveable. We know nobody likes the word “budget,” but unless you’re Elon Musk or Warren Buffet, you’re going to have to give serious thought to where your money is going. You can only spread it so far.
We encourage our clients to create a retirement budget before they retire. Then we suggest they live on that budget for six months while they’re still working.
We want them to see what it’s like in real life (and not just on paper).
Is it workable? Or unbearable?
If you can’t do it, you may not be financially ready.
When you’re financially ready, but not emotionally ready to retire
What about those other folks? The ones who would say, “Yes, I’m financially ready. But truth be told, I’m not emotionally ready.
Here’s what we would say to these people, “It’s okay to keep working.”
Work is a good thing. For many it brings real enjoyment, a sense of fulfillment, a feeling that one is making a valuable contribution. All of that is good stuff.
But here’s where some people get sideways.
They tell themselves–and others, “I’m just not financially ready. I need to work another five years.” But the truth is they are financially ready, they just aren’t ready to admit that they have enough. In fact, that’s a word for all of us to wrestle with: enough.
What is “Enough?”
Enough is a hard word for people to grapple with. As they think about retiring, it’s important they get to that point where they can say, “Yes, I have enough money” and “Yes, I’ve also had enough of the workplace” or “No, I haven’t quite had enough of my work or done enough in my job.”
We need to separate those two distinct concepts in our minds: the amount of money we actually need and the desire we have to make a workplace contribution (i.e., working with others on worthwhile projects that give us a sense of meaning).
Look at your portfolio. Talk to your advisor. Determine how much money you’re going to need. If you have enough, great!
Next, you have look at your heart and determine if you want to retire. If you have the money to quit, but not the desire, then emotionally you’re not ready.
In that case, you may consider:
- Delaying your retirement. Work till it’s no longer satisfying for you.
- Considering a phased retirement. If your job/employer will allow it, cut back on your hours, and enjoy the best of both worlds.
- Take time to get emotionally ready. Some put off retirement (even though they have more than enough assets) because they don’t have a clue what they’d do with themselves all day every day if they weren’t going to the office! If this is you, begin discussing with your spouse or close friends what a fulfilling retirement could look like. As you talk about your options, you may find your desires changing.
At Christy Capital, we believe the season of retirement is a prime opportunity to pursue your dreams.
If you’re serious about turning all your wants and wishes into workable plans, we’re here to help.
Call us at (877) 864-1145. Let us help you wrestle with those questions.
Don’t be like so many who wait too long. Begin the process now. We can help you move from a great career to a meaningful retirement.