It’s OK to Spend in Retirement; Just Make Sure You Plan for It
By David Brooks, Founder & President of Retire SMART
Early in my career, I thought my job as a financial advisor was to convince people to be disciplined with their money. Be frugal. Pack away as much money for retirement as possible.
Now I find myself figuratively arm-wrestling with clients at the conference table in reviews, trying to get them to spend money. I try to move them with humor: your kids will have a ball with all the extra money you’re leaving them; your Uncle Sam is smiling as he thinks about the chunk of your unspent fortune that he will get when you are no longer here.
I’m not mocking my clients. I understand their concern. Numerous studies show that the number one concern people have about retirement is running out of money. In fact, in a recent study by financial services provider Allianz, nearly two-thirds of Americans said they fear running out of money in retirement more than they fear death!
I learned that my job as a financial advisor is to be SMART with clients’ money in retirement. As fiduciaries at Retire SMART, we act in the best interest of our clients. We make a plan that allows the client to spend retirement dollars with confidence. That’s the key: confidence, because you have a plan you can trust.
The “A” in a SMART plan stands for advanced planning. Often people think of estate and legacy planning, which certainly are part of advanced planning. But advanced planning also includes what is commonly called the bucket list, the things you want to do in retirement to maximize your enjoyment of life.
Why not have a financial advisor put those items into your financial plan?
That’s why we developed an income tool that shows clients how to frontload some of their retirement spending into that first decade of retirement often called the go-go years. These are the years when you are healthy and active. Travel the world, restore cars, do whatever you want to do.
A properly built retirement plan will allow you to live the go-go years with gusto. Figure out what you will need for the slow-go years (second decade of retirement) and the no-go years (third decade and beyond). Then you know what you have available to spend upfront in the go-go years. You can spend the go-go budget with confidence and truly enjoy yourself because you know the slow-go and no-go years are taken care of.
You have worked hard your entire life. You should not have to live on pins and needles in retirement because you are worried about running out of money. You need a plan that accounts for all the expenses you will face in retirement, especially medical expenses and taxes. Then you know what you can allocate for the bucket list.
Experience the freedom to enjoy retirement that comes with having a plan that lets you pursue your bucket list in the go-go years, secure in the knowledge that the rest of your retirement is covered.
