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A Survival Guide for Retiring Boomers

Most people approaching retirement understand that life is about to change a whole lot: More freedom, more time, less day-to-day structure.

But what many new retirees don’t grasp is that their financial mindset needs to undergo a major change as well. Simply put, without that consistent stream of work income, your financial margin of error becomes a lot smaller, and your financial stability becomes less secure.

So what are the financial rules of the road in retirement? Like most of the rules for financial health, they’re pretty simple. The trick is obeying them.

Make a budget. We’ve worked with many wealthy retirees who have something surprising in common: Not having a budget. If you enjoyed a lucrative career, you may have had the luxury of spending whatever you needed, or wanted, to spend. In retirement, wealth becomes more finite, so budgeting becomes essential.

Budgets, of course, grow out of longer-term goals and deliberate lifestyle choices. You may want to make sure you don’t outlive your money. You might want to live comfortably but also leave a meaningful legacy. Or you may want to live to the fullest and spend your last dollar on the last day of your life. No matter what your goal looks like, you’re going to need a budget to make it happen.

Make changes. Your budget may prompt you to adjust some of your behavior around money. One of the most common changes we see has to do with giving to family. You may have enjoyed showering the grandkids with gifts during your working years; you may have footed the bill for family vacations. In retirement, you’ll need to at least examine whether to dial the giving down a bit.

Avoid investing extremes. Some retirees invest as though they’re infallible, taking on far too much risk. More often, retired investors go to the other extreme, keeping their money completely safe in cash or in securities that yield virtually no income. This behavior often begins during volatile markets—retirees move their money to the sidelines with the intention of getting back into the market later. Too often, that money stays out of the market permanently, being whittled down by inflation with surprising speed.

Plan your estate. Most retirees think they need to get their estate planning done before they die. In reality, they need to get it squared away while they’re still healthy. If you become incapacitated without your affairs in order, you’re leaving a mess for your family. And the reality is that the older you get, the greater your health risks become. So use some of your ample free time to get it done.

Even if you were disciplined about money during your career, you may find that you need to be even more disciplined in retirement. The payoff, of course, is peace of mind. Don’t hesitate to get in touch if you’d like to discuss retirement planning further

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