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5 Mistakes Pre-Retirees Make

  1. They don’t know what it costs them to live
    • If you don’t actually know how you spend each month/year, how can you know if you have enough saved to support that spending? Tracking expenses on a monthly budget is often too tedious a task for people to keep up with. There is an initial surge in commitment that wanes pretty quickly. Expenses not captured in the budget are often larger than anticipated. A simpler approach is to download the last 12 months’ worth of expenses from your bank’s website. Take out any large non-recurring expenses (but make sure they are non-recurring) and divide the net number by 12. That’s your monthly spending. The longer you can do this, the better grasp you will have on actual spending.  
  2. They haven’t figured out how much they’re ABLE TO spend in retirement
    • It’s a tough and often underappreciated transition from saving to spending. For your entire working life, you’ve been conditioning yourself to save and now you’re going to flip a switch and start spending those savings! 
    • Most people think about the risk of overspending in retirement. For some, though, not knowing how much they are able to spend leads to underspending. What was the point of sacrificing all these years to save money that you will never use to do the things you envisioned?
  3.  They haven’t thought about what retirement will look like
    • You can only play so many rounds of golf. Eventually the landscaping is perfect. Your children want help with the grandkids, but they need their space too! You love your spouse, but do you love them that much to be together ALL DAY EVERYDAY?!
    • If you haven’t already, develop a hobby. If you’re charitably inclined, start finding causes you can support with your time (and maybe money too). Invest in relationships with friends and family.
  4. They haven’t planned for what they would do if their investments were down just when they planned to retire
    • Sequence of returns refers to how your investment portfolio performs in retirement. Ideally, your investments cooperate in the first few years of retirement to allow you a bit of a head start and not require you to draw from your portfolio when it’s down. We can’t control what the market does from year to year though. What if the first couple years are bad, how would you adapt? Are you willing to cut back on spending? Could you find part-time work that is enjoyable and stimulating? Would you just continue spending and hope for the best? 
  5. They frame retirement as an end of work instead the beginning of financial freedom
    • Not everyone retires just because they can. We often see clients continue to work longer than they need to, financially, because they enjoy what they’re doing and still find meaning in it. Why stop doing something you enjoy, or something that adds value to your life, just because you’ve reached a certain age? Not to mention, working a few extra years can make up for a lot of financial shortcomings earlier in life.
    • Financial freedom means control over doing what you want, when you want to do it, with the people you want to do it with. 


Move forward with confidence and enjoy that retirement you’ve always dreamed of!