Retirement Cash Flow Financial Planning

How your Money Mentality Should Change in Retirement

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Reaching retirement can feel like crossing the finish line at the end of a 30-, 40- or even 50-year-long marathon. Therefore, many of us look forward to the endless vacation days and the rest and relaxation of retirement. 

But although a life with no alarm clock is something we dream about, the truth is, retirement really throws a wrench in how we view our money, and the switch from receiving structured, employment-driven income to drawing down investment accounts can be more complicated than we expect.

If you’re retired (or nearing retirement), you’ve worked long enough to see a vastly transformed economy. Factors like offshored workforces and manufacturing, corporate acquisitions, and the transition from a manufacturing-based economy to one based on service, information and technology has fundamentally changed employment dynamics. 

Money Management Pivots

With some public-sector and rare private business exceptions, defined benefit plans like pensions have gone the way of the dinosaur. This means the burden of saving for retirement has shifted to you. And just as your money mentality has changed over the course of your career, so too should it change when you retire. 

Here are some of the money-mentality pivots needed for a successful retirement:

You used to ask yourself if you were saving enough money for retirement. Now you’ll have to ask yourself how long you need that money to last for both you and your partner.

You used to set retirement savings goals. Now you need to set budget goals that make sense for your non-working lifestyle. 

You used to optimize your portfolio to reflect your growth needs and risk capacity. Now that you’re retired, you may be more focused on stability in your investments.

You (probably) used to work full-time for your primary source of income. Now, luckily, you have a lot more flexibility. 

  • Do you want to work part-time? 
  •  Consult? 
  • Or do you want to pursue a retirement career that reflects one of your passions? 

Easing into Retirement

When you think about it, suddenly moving from working 40 hours a week to zero can be a real shock to your system. Although it may sound great in theory, the truth is that we’re creatures of habit—and we don’t always react well to quick and dramatic changes. 

Some employers will allow you to ease into retirement by gradually shortening your workweek over one or two years. This can be a great way to get your toes wet before diving into the deep end of full retirement. 

In order to avoid finding yourself with nothing constructive to do, use your days off to discover new hobbies, start volunteering, meet with friends and begin developing a new routine you can expand on through your retirement years.

If your current place of employment does not offer a gradual retirement option, you could search for a part-time job, perhaps something that’s more laid-back or more aligned with your interests. 

Easing into retirement not only helps reduce the shock but also can be a great way to continue earning income without committing to a full workweek. 

Get Help in Preparing to Retire

If you’re struggling with your retirement money mentality, or other aspects of the retired life, there are things you can do. Start by making sure your retirement plans are aligned with your passions—friends, family, travel, hobbies, volunteering and so much more. Assess whether you are going to have enough money saved to pursue your desires.

Look for role models, people like you who are thriving in their retirement. You can also get help from a financial professional to set and meet your retirement goals.

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This content is developed from sources believed to be providing accurate information, and provided by Kelly Financial Planning. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.