Mark P. Bernier, CFA | Posted on Dec 21, 2021
As you approach your retirement years, it’s helpful to envision what this special time might look like and how you will fill your days. Understandably, for many of us, financial resources are limited, so how do you prioritize your retirement wish list into “needs” and “wants”?
First, start making your wish list well ahead of your planned retirement. The earlier you start the process, the greater the probability that more of your goals are attainable. Be very specific and categorize your wish list between “needs” and “wants”. Do you need one car or two in retirement? Want a golf course membership? Need to fund significant health care expenses? Want to travel to visit your children and grandchildren each year? The more granular you are with your plans for retirement, the better. Aside from being able to build reasonable estimates of what it might cost to fund your lifestyle, you can identify those wish list items you could give up.
Once you have created the list of “needs”---including housing, utilities, taxes, healthcare, transportation, food, clothing and more---move on to the “wants”. Assessing the desirables that are most important to you will help determine what action steps are necessary and when those actions must be taken in order to fund those items. If you want to live a globetrotting lifestyle, you may need to make financial sacrifices or significantly increase savings years or even decades in advance. Consider, too, the frequency or the duration of the “wants”. As an example, you may plan for extensive worldwide travel in the earlier years of retirement, but expect that to decrease in the future.
Lastly, assess the income you will need to address your “needs” and “wants”. This is often the point where consulting with an investment or financial planning professional will be in your best interests. Careful evaluation of retirement income sources (Social Security benefits, pension benefits, IRA distributions, etc.), examination of current spending and savings habits, and assessment of your investments should result in a unique set of recommendations aimed at providing you with the highest probability of successfully attaining your retirement goals. A financial plan with the flexibility to address your changing “needs” and “wants” may be the best tool for mapping out your definition of retirement.
Whether you are a few years or decades from retirement, start putting together your wish list. Be sure to reevaluate it periodically, as your priorities may change over time. Consider working with an investment or financial planning professional to put a plan in place that provides you with peace of mind and in the best position to see more of those retirement “wants” become a reality.
Keeping up with financial matters can be an overwhelming process, especially given the many facets of your personal situation. Our financial advisors often serve individuals, in our community, and maintain the specialized skills necessary to assist you as you pursue your financial security.