Jim Chilton is CEO of The Society for Financial Awareness (www.sofausa.org), a San Diego nonprofit he founded in 1993. He is writing a guest column for the U-T as part of National Financial Literacy Month.
Often when we hear “So and so is retiring”… we do two things:
- First – we think that individual is so lucky to be able to quit work and go pursue his/her desires.
- Second – we reflect on our situation and often become quickly disenchanted, belaboring the fact we don’t have enough money to finish, what happens if we have a calamitous medical issue, what if, what if, what if????
Yes, taking stock in our situation is important, but so is realizing that there is a finish line to us working. It behooves us to do everything in our purpose to build a plan, with doable expectations, so we act wisely with our money throughout the journey to our destination.
Retirement consists of 3 basic methodologies:
- First step – ACCUMULATION. Build over time an ongoing “deposit mentality” into the various investment products that you feel comfortable with infusing your cash into.
- Second step – SAFETY. Grow and preserve what you are accumulating. Safety is everything.
- Third step – DISTRIBUTION. Take withdrawals using a methodology that provides you a lifetime income without inherent risk.
Other issues to consider would be –
- Professional assistance: CPA, Estate Planning Attorney, Financial Advisor, Life Insurance Agent, etc to help plot, plan, and create a reachable, enjoyable journey in your golden years.
- Taxation: Understand that most “Pre-Tax” contributions become 100 percent subject to taxation at distribution time. Look into Roth IRA’s and “after-tax” investments.
- Inflation: The inherent rise in costs of goods and services. Usually, the cost of living NEVER goes down. It’ll cost you more dollars in your future years to maintain your current level of living.
- Your health (& spouse): As you age, health issues and the cost of care will continue to dominate your life.
As all of us age, our self-worth and relevance is always “in play.” Some folks retreat, fade away, and then pass away. Others live life to the fullest. They’re engaged in activities, travel, grand- parenting, hobbies, and volunteer work. Being active is a necessity. The transition from “your career to your rear” is an important slipping point in your self-significance as you move into retirement.
With proper planning and an enthusiastic attitude for life, your retirement years can bring great joy and build self-purpose. It’s definitely a new chapter when you leave the last job.
Take a moment and think about living another 25, 30, 40 years from now. Here are some questions for you to chew on:
- How will I navigate this chapter financially?
- What actions, now, today, should I be doing for later?
- Where do I see myself living years from now?
- Am I covered, with the correct insurance, if a major health issue or crisis shows up?
- If I passed away tomorrow, have I provided an easy plan in distributing my estate to those beneficiaries I love those most?
- Have I created a “go to” fund for travel, emergencies, fun?
- Are my income streams set and in place to provide for me?
(These are just a few!)
One final thought.
Someone said “The hardest part of being alive is living.” It’s true. Trying to smoothly transition out of the rat race to happy acres is totally up to you. You plan for it or you don’t. You have the money or the reasons why you don’t have the money. Actions today create tomorrow’s destiny. We suggest:
- End the procrastination.
- Write answers to these issues.
- Set goals.
- Count your money and protect it!
- If you need help, seek it.
- Trust your instincts.
- Make wise choices.
Don’t forget bingo is on Tuesday nights at the Senior Center! Enjoy the ride. It is coming!