October 2022 E-Newsletter: "Help, I'm Spending Too Much in Retirement! What Should I Do?"
Melissa A. Seamon, CFP®
Senior Financial Advisor
This E-newsletter discusses the anxiety some retirees feel that they might overspend in retirement and the threat of a recession isn't helping! This newsletter offers some sage advice.
You dreamt of a comfortable and happy retirement. The kids are grown, and your career is finished; you worked hard and saved hard. It's your time now - to travel, acquire the vacation home, or buy that dream car. This is what retirement is meant for, correct?
But maybe those purchases and vacations weren’t in the original budget and now inflation and unreal gas prices are causing you some anxiety each time you gas up the car and the boat. You can’t help but read the headlines and hear the talking heads on TV say … gulp, recession. What will that do to your nest egg?
Here are three things you can do if you want to reduce your spending in retirement:
1. Look at Your Short-Term Spending
First, take a deep breath and read some good news:Research from BlackRock and the Employee Benefit Research Institute showed that retirees across all wealth levels still had 80% of their pre-retirement savings after 17-18 years of retirement. That is especially true for high-net worth individuals, who have assets that are in excess of more than $1 million. So, while you may not be in danger of running out of money completely, just take a step back and look at your spending. Maybe don’t cancel those Viking River Cruises you had planned but consider postponing in the short-term.
You can also consider a lower drawdown rate from your investments while the stock market is down. This can help your funds recover quicker once the market inevitably goes back up.
2. Set Long-Term Priorities
Meanwhile, review your overall retirement priorities. What are your top five goals?
Many retirees like to consider things, such as:
● Keep up your lifestyle
● Travel
● Helping your kids and grandkids now
● Leaving an inheritance for future generations
● Charity and gifting
How did you order your priorities as you approached retirement? What about when you first retired? How about right now?
It’s OK if those priorities have changed. Our whole world has gotten quite the shake up in the past two years and, even before that, life has a way of making us rethink in a split second what really matters. Perhaps your health or the health of your spouse has changed.
Once you have reviewed your priorities, then you can reallocate your funds accordingly. This would be a more long-term strategy.
3. Lean on Expert Advice
If you’re worried about preserving the longevity of your wealth, making sure you have your funds allocated appropriately, and making the right short-term moves, a financial advisor can provide objective, expert advice.
Their keen knowledge of the market and insight into your personal financial situation and goals can help guide you to do everything that you want to do in retirement.
Want that kind of peace of mind for your retirement? Schedule a meeting with us today. For more information about the comprehensive planning services we provide, we encourage you to visit our website and see if we could be a good match. We best serve clients looking for exceptional client service, who value a long-term partnership, and have a minimum of $500,000 in investable assets.
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