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Have you ever wondered if the investment strategy being implemented in your financial plan is the right one for you?
In today’s blog, we are going to talk about 3 major stages of retirement planning, and how mindset shifts may call for allocation changes during those times.
Before we jump in and talk about each of these stages, to clarify for those who are not aware, asset allocation, broadly speaking, refers to the mix of your assets or investments in your financial or retirement plan.
Now let’s talk about each of these 3 major stages of retirement planning and more specifically the mindset shifts surrounding each of them.
Early Retirement:
The first major stage of retirement is what many would consider the “Go-Go” Years.
In this beginning stage, some may initially not know how they want to spend their newfound time and freedom, but after a bit, we tend to see retirees pursuing their passions.
During this time, retirees may also be at the most energetic stage of their retirement, potentially have the best health of their retirement, and overall have the desire to get out and do things.
Spending retirement assets and savings is something new and potentially weird as you’ve spent the majority of your life saving that money.
Major expenses we typically see include spending on travel, and hobbies, and even bucket list items.
During this time, we tend more often than not, to see the asset allocations of a new retiree not change much when compared to the couple of years leading up to retirement.
Getting a real feel for the streams of income, living expenses, and potential volatility are areas that we focus on during this time.
Mid-Retirement:
The next major stage of retirement planning would be considered the “Slow-Go” years.
Here is where we typically see folks transitioning into their late 70’s and 80’s and although they remain able and willing to care for themselves, they may slow down with their travels and other activities.
This could be for a number of reasons including potentially wanting to be near children and even watching grandchildren grow through life.
It could be do to health or mobility reasons. Or even just because you’ve happily accomplished many of the things you set out to in the beginning of retirement and you feel satisfied.
Here, you may find yourself spending less on discretionary items and more on health-related items.
We also see families many times begin to plan their estates in a more serious manner whether it’s gifting to the next generation or more seriously pursuing philanthropy.
During this time, if we see clients comfortable with their situation, we may begin to speak about a more solidified plan as far as their legacy is concerned.
This can sometimes lead to a shift in asset allocation geared more towards the stage in life that their heirs are currently in.
It may also involve an introduction to the next generation and including them in meetings to educate them on how their parents assets are allocated and what they’re used for.
Although this is more a matter of preference, if leaving a legacy is important to you, the conversation on asset allocation may be impactful.
Late Retirement:
The next stage major stage of retirement planning is what we consider, the “No-Go” Years.
Generally speaking, this stage starts in the late 80’s and beyond.
Retirees in many cases tend to slow down much more and they may face challenges with health and moving around overall.
During this time, retirees may be more dependent on their heirs, home aids or assisted living facilities when it comes to care and daily living.
We tend to see a significant focus on comfort and convenience during this time as many other life goals have already been achieved.
Estate planning reviews are a focus for us, ensuring that our discussions include getting one’s ducks in a row and having an understanding of exactly how they would like their legacy to play out.
At this point, many times, we experience a deepened relationship with the next generation. Conversations are generally more philosophical and not just to be sure one’s wishes are carried out, but also upholding the legacy they wish for.
Final Thoughts:
Everyone’s situation is different and truly depends on how you would like your retirement and legacy to play out. During this time, we always suggest have an open dialogue with your tax, financial and legal professionals to ensure they are all on the same page.
Thanks for reading!
- - The Rockline Team
Disclaimer:
Rockline Wealth Management (RWM) is a registered investment adviser located in Plainview, NY. RWM is registered with the U.S. Securities and Exchange Commission. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission.
Rockline Wealth Management does not offer tax or legal services. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation.
All investment strategies have the potential for profit or loss. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment or strategy will be suitable or profitable for a client's investment portfolio. Asset allocation and diversification do not ensure or guarantee better performance and cannot eliminate the risk of investment losses.
The opinions expressed and material provided are for general information, and should not be considered a solicitation of financial advice or for the purchase or sale of any security.
Real-life and fictional examples given in this video should not be viewed as guaranteed outcomes when investing. Past performance is not indicative of future results and every individual’s investment circumstances are different. Individuals should consult their financial professional before implementing their investment plan.