The changes we’ve seen in 2020 have many of us not only thinking about our present situation, we’re thinking about the future as well – especially as it relates to our finances and retirement planning. It’s one thing to look at market volatility as a young investor. It’s another thing altogether if you’re nearing retirement.

In the past, retirement plans were much more straightforward. They were based on a “three-legged stool” which mainly consisted of a pension through the employer, Social Security from the government, and the portion you were able to save during your working years.

During the last 20-30 years, there’s been a major shift away from pension plans toward 401(k)s. This change puts a larger burden on the employee to fend for their own retirement through savings. In other words, the “three-legged stool” has become a wobbly “two-legged stool” and the retiree must rely much more on their savings than past generations have had to.

Which brings us to today.

Over the last few months, we’ve had several calls from clients who are thinking about retiring early for a couple of reasons:

1. They’re worried about being laid off.
2. The stress of working through a pandemic has been overwhelming.

These are both valid reasons for thinking about making a change in your retirement timeline, but there are other things to consider.

One of the first things – and this might surprise you – is not finance related.

 

Are you emotionally ready for retirement?

After all, you’ve spent the last 30-40+ years working at a career, building an identity and self-worth that’s partially tied to your job, and you’re also used to seeing a paycheck hit your bank account every two weeks. Suddenly you don’t have a check coming in on payday, and you need to figure out who you are outside of your profession.

One of the things that made you so great at your job was your willingness to give the job your full attention and focus; how are those 40-50 hours going to be filled every week in retirement? Who are you outside of what you do for a living? Spending some time considering this before you enter retirement can make the transition much easier. It’s also a big factor in determining if you’re financially ready for retirement (For example: Are you planning on traveling? This needs to be budgeted for).

This question leads us to the next:

 

Have you considered every financial variable?

When it comes to planning for retirement, it’s important to poke, pull, and prod at every portion of your retirement plan; so many variables come into play such as…

• Life expectancy
• Return on investments
• Health complications

…just to name a few.

This might be when it’s time to talk to a professional who can help plan for unforeseen events. A comprehensive financial plan will utilize statistical analytic tools to illustrate the potential scenarios of your retirement. This also allows us to best estimate how returns on your investments can create different lifestyles for you in retirement and how to best allocate your investments to meet your goals. This, along with managing taxes and determining your health insurance premiums (again, a big factor in what you’re spending as a retiree) and when it’s best to start drawing on Social Security are a few of the other factors we analyze for you.

 

Don’t go it alone.

Denver Private Wealth Management knows that so many of you are feeling the strain and stress of the current economic and health situation. The truth is that no matter what’s going on in the world, plans change all the time. That’s why it’s important to talk to an unbiased resource about what comes next.

If you’re feeling even a little unsure about your retirement plan – whether you’re planning to stop working tomorrow or in 30 years – let us know. We’re here to answer your questions so that you don’t wake up one morning wishing you’d done something differently.