Retirement accumulation isn’t just about the ending balance in your account, but what you can do while accumulating for your retirement that still allows you to enjoy your life.
It’s parallel to everything we do in life. You build your career to get to a certain position, to reach a certain goal. Sometimes we might forget that the process is just as important. You can pause within the process to take time to enjoy what you are doing, without having to rush or sacrifice it all to get to the end goal.
I’ve changed the risk questionnaire and retirement portfolio scenarios I present to my clients to determine age bracket goals: “Tell me what your 40s look like? Your 50s? If you have kids and they are out of school, what are some of the things you want to do? Are you willing to have less in retirement to go and enjoy those things?”
I think the answer is going to be “Yes!”
When I transitioned my practice from the independent broker-dealer to the registered investment advisory firm, I polled my clients and asked them to tell me what they liked these last 6 years, and what I could have done better or differently. This issue of planning to save but still enjoying the money came up, and I think it is important enough to share.
The more conversations financial advisors have around these questions now, when things do change, clients will be prepared and ready for those changes. In other words, if the client thinks they need to be constantly accumulating, but then decide they want to get that special trip or vacation residence, they might experience guilt around it. This is unnecessary guilt, and clients should be reassured that all things can become part of their plan. Planning in advance allows advisors to bake in those goals; clients can have freedom to explore ideas without the potential guilt around how it’s going to affect their retirement.
Case Study:
For 6 years, a client saved $175,000 to remodel his home. A year and a half ago, he came to me and said, “Oh Jennifer, please don’t be upset. I bought a vacation home.” I explained that I wasn’t upset, but that the modeling would have to be adjusted to account for those expenses during retirement.
The client became nervous about how the vacation home might negatively impact him. When we eventually sat down to discuss the possibilities, the client said, “Jennifer, I don’t know if I’m even going to make it to 70 to take the accumulated money and enjoy it. I want to enjoy it now while I’m still alive.”
The balance between not outliving your money in retirement, but still enjoying life, is a tricky balance. Advisors have a challenging though not insurmountable role to help clients understand that it is a balance, and that they can enjoy the things they want in life.
Jennifer Failla, CDFA™
Principal, Strada Wealth Management
Toll Free: 866.526.7098
Email: info@stradamanagement.com