If you’re like most people who are a few years away from retirement, you may be fixated on the financial aspects of this next life chapter. This emphasis on finances is often centered around questions such as “When can I retire” or “Do I have enough to retire?”
However, our many years of experience as financial advisors and coaches have taught us that those with this tunnel vision often miss out on the joy and fulfillment that retirement can offer. They neglect to consider all the things that are important for making this next chapter of their lives one of their very best.
Seven essential elements for living an extraordinary retirement.
Our view is that to truly live well in retirement, one needs to focus on more than just money. Creating an extraordinary retirement entails gaining clarity and alignment (if you’re part of a couple) across seven key areas as described below.
With each element comes one big tip to aid in their success. We encourage you to review these thoughtfully to help gain a better understanding of these important retirement factors.
#1: Deciding upon the location of where you want to live. Where you want to live and the reasons for your choice can have a dramatic impact on your finances and ultimately your retirement readiness.
If you plan to move, knowing the “why” behind your decision can help minimize the risk of making a relocation mistake that requires another move. These types of situations can create substantial costs and disruption in your lives.
Consider the couple who plans, when they retire, to move from the Midwest or Northeast to Florida where there is no income tax.
It’s likely, that by making such a move, they may not need as much money saved to retire and could either retire earlier than planned or simply save less. However, if they relocate to Florida and discover that they can’t stand the summer heat, they’re faced with the decision of renting or buying a home elsewhere for the summers. Think about it. This additional expense may erase the financial benefits the couple thought they would attain from moving to Florida.
ONE BIG TIP: Try before you buy. Consider taking multiple and extended trips to potential locations that you may want to retire to. We often encourage our clients to plan their visits during various times of the year to experience all the seasons. This strategy can help ensure that the reality of living in your new home matches your expectations.
The expenses associated with the frequent travel to test out a potential new location for retirement are often far less than the costs to relocate multiple times – especially after considering moving costs, real estate agent fees, etc.
When it comes to harmony between you and your significant other, when deciding where you want to live in retirement, each of you should make a list of “must haves” and “deal breakers”. This way you can identify commonalities or discrepancies and thoroughly discuss the options before you embark on your exploration process and make a final decision.
#2: Identifying your retirement home. Many people buy their homes when they are younger or raising a family. At that time, accommodations for mobility or aging might not be at the top of homebuyer’s list of “must haves”.
However, when preparing to retire, it’s essential to thoroughly explore this topic because it could potentially impact the number of financial resources you’ll need for retirement.
For example, you might have purchased a larger home that was ideal when more room was necessary and have now decided to downsize into a smaller house or condo. This could add money to your nest egg and potentially allow for more fun in retirement, or an earlier retirement date.
On the other hand, if you choose to live in a house that isn’t suitable for aging in place -or a home that is older, you might need to budget for potential repairs and renovations. You may also need to factor in the costs of ultimately moving if your home proves to be unadaptable to your needs.
Your choices, as they relate to housing, could translate to needing hundreds of thousands more in additional savings before being retirement ready.
ONE BIG TIP: Consider all your options. We suggest you take time before retirement to explore which housing options are on the table and which to take off. This means taking into consideration and touring condos, apartment units, co-ops, retirement communities, and single-family living units. There are numerous options to explore these days. When comparing alternatives, you must also consider HOA fees, amenity fees, property taxes, utilities, and insurance rates since purchase prices are only a portion of the total cost consideration.
When it comes to alignment with your partner, it’s critical for each of you to consider how you envision using your future home and how it aligns with both of your goals for retirement. Identify the key areas where you agree and discuss any differences.
#3: Making the most of your leisure time. Many of our clients are so focused on working and taking care of their families that they have had little time for leisurely activities. During retirement, this newfound free time provides the opportunity to explore new hobbies, spend more time together, and enjoy the company of friends.
We’ve come to find that “leisure time” means different things to different people. Given that, it’s imperative for couples to each have a plan to make sure that their definitions align with each other. Otherwise, you risk experiencing common anxieties around retirement such as “What do I do with my time?” “How can I spend 24 hours together with my spouse or partner?” or “Where will my social interactions come from when I’m not at work?”
ONE BIG TIP: Recognize that retirement is a magnifier. Contrary to what many retirees think and say, research suggests that retirement is more likely to magnify what we already do rather than change it. For example, if you watch a lot of TV during your spare time prior to retiring, you will likely do it more once your work obligations have ceased. This is why it’s important to figure out how you plan to spend your leisure time prior to retirement, so you can start living the life you want in preparation.
When it comes to retiring with a spouse or partner, you will want to discuss how you each foresee your together and alone time being spent, then plan on how to accommodate each other’s vision. If you don’t, one may be looking forward to spending every waking moment together while the other is looking forward to their individual hobbies, leaving at least one half of the couple dissatisfied.
#4: Becoming specific about travel. Exploring new places during retirement is a common goal for many, though travel is often more of an idea than a plan. As with leisure, couples may not have the time to travel to the extent they hope for until after they retire.
Before retirement though, it’s important to explore how exactly you like to enjoy your vacation. How long do you like to be away before coming home? How often do you want to travel? Where do you want to go? Do you prefer to fly or drive and do you like economy or premium seats? Where do you like to stay, at a Holiday Inn or the Ritz? With so many options and price points, this is an area, that if left unexplored, can lead to large deviations from original plans and costs that can greatly affect your ability to retire or stay retired. It can also cause friction within a couple if you have different ideas on how or when to travel.
ONE BIG TIP: Organize and prioritize your bucket list. We all must realize that our bodies slow down at some point and the demands of travel can become a barrier as we age. As a result, couples should organize and prioritize their bucket lists. In addition to thinking about which items are your priorities, divide up your travel bucket list based on as how long the flights are, how strenuous the activities will be, and other factors that cause difficulty with age. If possible, prioritize the more challenging trips in your early years, even if it means you spend your travel budget a little earlier in retirement.
#5: Determining Family time. Many people say they want to spend more time with family or to help them in retirement, but how much time is spent, what that time looks like, and how much support is given, can vary widely. For some, occasional visits might suffice while others may want to see adult children and care for grandkids on a regular basis. And there are some who might prefer to write a check to help those in need. Depending on the answers, this could easily delay or interfere with big travel and leisure plans or have significant financial impacts. Financial gifts and legacy intentions are also important considerations when thinking about family and retirement.
ONE BIG TIP: Remember, it goes both ways. It’s important to not only think about what family time youwant, but to also make sure your family agrees.
When it comes to family time decisions, avoid the trap of having a one-sided discussion. For example, you might feel you are doing your kids a favor by watching your grandkids. While most parents would appreciate help with their kids, some may really want their children to go to daycare for the socialization benefit. Making this a discussion you have ahead of time, can help ensure both sides are heard, and family harmony continues.
#6: Committing to health and wellness. Although this might be the last thing you want to think about before you’ve even retired, your health, as you age, can impact housing choices, where you live, the activities you enjoy, and many other areas in life. Because of this, it’s crucial to make health and wellness a priority and be realistic about your well-being to more accurately estimate the cost of retirement and your readiness to do so. You will also want to assess the quality and health of your family and intimate relationships. The more time and energy you invest in health and wellness today, the more likely it will pay dividends in the future.
ONE BIG TIP: Talk to your elders. It’s hard for many to imagine life when mobility becomes an issue. Hearing firsthand from those who have lived through this life stage is a great way to shape your understanding and figure out your plan. Consider talking to someone in their 70s and 80s to understand the differences 10 years can make.
Be realistic about your goals at various ages. And remember, the amount you spend does not have to follow a straight line. A customized plan that takes age into account is more likely to succeed.
Finally, just like you need to regularly invest to build a financial nest egg, you will want to consider how you are currently investing in the health of your relationships, so you can have the joy of companionship and a support system during retirement.
#7: Solidifying your finances. Although this is where most people start, in our view, it is where we should finish. That’s not to say we should ignore financial matters until all these other topics are figured out. While there are many tried-and-true strategies to live better financial lives, you can really dial in the accuracy and the results from a financial plan when having a clear vision of where you are and where you want to be.
Having a shared vision with your spouse or partner on elements 1- 6 can provide a way to chart a smoother financial path and achieve your goals in the most tax efficient way possible.
This means knowing with precision which retirement plan tax options are best, the optimal time to take Social Security, the right amount to save for each goal, and the appropriate amount of risk to get you there, just to name a few.
The difference between being close and being precise in financial related areas can translate to hundreds of thousands of dollars of lost savings or more years working. The best financial plan won’t just tell you if retirement is possible, it will show you what’s possible in retirement. Although the difference is subtle, this mindset can help couples achieve an extraordinary retirement.
ONE BIG TIP: Clean up and organize the mess. The first step of any financial plan is to know where you are today. For some, the records are in a shoebox; for others, they are all over the place. So, start by cleaning up the mess and get things organized. Going through your files and mail allows you to build a complete financial picture with supporting documents, that a trusted financial advisor or financial planner will need to provide good advice.
We also suggest couples search abandoned property websites for every state they’ve lived in. Many clients find missing investments and even monthly pensions they missed because they moved and forgot to change their address.
When it comes to alignment with your spouse or partner, we encourage you to take the time to identify what you both value in life. This will help you come to an agreement about a spending plan because it will take into consideration both of your values.
Pulling it all together
As you can see, retiring well is about more than just money. Time and time again, we’ve seen, as financial advisors and coaches, that achieving clarity across these seven elements can enhance one’s financial life and contribute to living an extraordinary retirement.
If you want to avoid missing out on the joy and fulfillment that retirement can offer, contact us to learn more about how our Dream.Plan.Retire program can help make this next chapter of life the very best yet.
MPPL Financial has offices in Duluth, MN, Grand Rapids, MN, Wausau, WI, and Crystal Lake, IL. Metamorphosis Coaching Consulting and Training is located in Duluth, MN. While we’re located in the Midwest, we work with clients across the U.S.
Investment Advisory Services offered through Midwest Professional Planners, Ltd. (“MPPL”), 2610 Stewart Ave., Ste. 100, Wausau, WI 54401, 1-800-236-6775, an SEC-registered investment advisor. Certain representatives of MPPL are also registered representatives of, and offer securities products involving commission or transaction-based fees through APW Capital, Inc., 100 Enterprise Drive, Suite 504, Rockaway, NJ 07866, 1-800-637-3211. Member FINRA/SIPC/MSRB. MPPL is independent of APW Capital, Inc. Registration with the SEC or State Regulatory Authority does not imply a certain level of skill or expertise.