How to Pursue Your Ideal Retirement
May 16, 2022 by Interchange Capital Partners
By Kendra Reilly, CFP®, CIMA®, CEPA®
What type of retirement do you envision? Spending your golden years close to your hometown, near family and friends? Finally traveling the world or moving to a warm, sunny climate? Volunteering or starting a new venture that you are passionate about?
As an individual or family with substantial means, you may not be worried about running out of money during retirement even though our experience has shown us that many people who do not have to worry still do. You may want to consider the following questions when figuring out what you want your retirement to include and what you need to do to make it happen on your terms.
What’s Your Ideal Retirement Date?
Many of us desire the flexibility that comes with retirement, whether that means retiring early or lightening your workload little by little so you can invest your time and energy into what’s most important. Your age (now and in retirement) is one of the most significant factors to consider when planning for your future. If you want to retire early, you’ll need to make sure your investments are set up to start withdrawals without sacrificing growth. You’ll also want to run a variety of scenarios with different market timing to determine the best strategies to maximize your wealth.
What Do You Want Your Retirement Life to Look Like?
Have you thought about the type of lifestyle you want to have in retirement? If you know you want to travel, play golf, or spend time with your grandkids, you need to factor in what that looks like, how much it will cost, and how you’ll make it happen.
For example, if you plan to travel, you’ll need to consider:
- Will you be traveling stateside or internationally?
- How often do you want to travel?
- How would you like to get there? (e.g., car or RV; first class on a plane or your own plane)
- Where would you like to stay? (e.g., 5-star hotel, Airbnb, with family members)
- Will you be traveling with your family? Would you like to cover their expenses too?
- Will you maintain your primary residence? If so, who will watch your house and maintain it while you’re gone?
Even if your dream is simply to spend time with your grandkids, you’ll still need to think through your expectations. To some people, “spending time with grandkids” means babysitting a few times a week. To others, it means footing the bill for all-expenses-paid trips to various destinations of their choosing. Whatever it is you want to do with your time, map out the details so you can have a clear picture of how much you need to allocate to make it a reality.
Will You Earn an Income in Retirement?
Although you won’t need to work during your retirement, it’s a great way to stay active, keep your mind sharp, and maintain a sense of purpose—and maybe even help you live longer. (1) Some retirees choose to build a second career around things they are passionate about. No matter what you do, if you plan to work during retirement, you’ll have more resources to afford even greater financial flexibility.
What Kind of Healthcare Coverage Do You Expect to Have?
Right now, you most likely have health insurance. When you stop working, you’ll need to secure healthcare coverage another way. You may be able to utilize your spouse’s plan if he or she is still working. Or you can get coverage through the healthcare marketplace. You qualify for Medicare starting at age 65, but even then, you may want additional coverage to pay for prescription drugs, dental care, eye exams, and other expenses.
Retirees sometimes fail to fully plan for expenses during the later stages of retirement, and medical care often tops the list. It’s estimated that retirees will use 15% of their income for health expenses, and the average retired couple could see healthcare expenses of approximately $300,000 after age 65. (2) Don’t let this be a planning oversight that prevents you from retiring comfortably!
Will You Have Any Dependents?
Your kids may be grown and out of the house by the time you retire, but that doesn’t necessarily mean you’ll stop supporting them financially. Almost 80% of parents said they still give financial support to their adult children (ages 18 to 34), according to a Merrill Lynch study. (3)
And even if you aren’t helping your kids out with daily expenses, you may want to contribute to their weddings, down payments on homes, or tuition for your grandkids.
Will You Leave an Inheritance for Your Family?
Most people want to leave a financial legacy for those they leave behind, but if you plan to pass your wealth to your children and grandchildren, it’s important to make the transition as smooth as possible with a comprehensive estate and legacy plan. Be sure to consider what kind of legacy you want to pass down. Legacy planning allows you to incorporate family or financial values into your wealth transfer. If your children aren’t as adept at money management or have made financial mistakes in the past, your legacy planning can help guide them through what to do with their new wealth. Finally, legacy planning may help protect your grandchildren and encourage generational wealth-building for decades to come.
What Is Your Charitable Giving Plan?
Do you want to continue your generosity when you’re retired? What will that look like? Whether it involves setting up a foundation or leaving assets for charities in your will, a smart charitable giving plan can help ensure you continue to support the causes you care about. There’s no lack of options when it comes to giving, so be sure to explore donor-advised funds, qualified charitable distributions, or charitable remainder trusts to not only bless others but also could minimize your taxes and maximize your gift.
How We Help
If only figuring out how to have a comfortable retirement were as simple as a one-size-fits-all formula. On the contrary, it requires a deep dive into your financial situation, family history, and goals.
Developing your Spend, Live, Give™ priorities is a great way to manage the risk in your portfolio and build the appropriate asset allocations for you and your family. Adequately managing risk in this way allows you to enjoy a longer-term perspective on the inevitable ups and downs of the market and economy.
Our goal at Interchange Capital Partners is to take the complications out of financial management while still making it a priority to understand your unique needs and inspire you to be more confident in your financial decisions. We thrive on giving our clients confidence knowing that their SLG™ portfolios have the potential to weather volatile economic storms without impacting their day-to-day spending requirements. Outsource your anxieties to us; we’ll be in charge of managing your wealth while you live your personalized retirement plan.
If you’d like to partner with a firm who will help you find the right balance between enjoying life and guarding your nest egg, email us at team@interchangecp.com or call our office at 412-307-4230 to schedule an introductory appointment.
About Kendra
Kendra Kasznel Reilly is the senior director of relationship management at Interchange Capital Partners, an independent registered investment advisory firm providing collaborative and comprehensive planning and disciplined wealth management. Kendra has 10 years of industry experience and spends her days building relationships with our clients and providing advice and strategy around the key areas of private wealth management; goal based investing, wealth expansion, wealth transition, protection planning, and charitable giving. She is known for her holistic approach that allows her to spot opportunities, identify gaps, and make recommendations to enhance our clients’ overall plan. Kendra is passionate about making sure our clients are on track to achieve financial security as she acts as their partner for all things financial.
Kendra graduated Cum Laude from the University of Pittsburgh with a double major in communications and English writing. She completed the Executive Certificate in Financial Planning program through Duquesne University and successfully earned her CERTIFIED FINANCIAL PLANNER™ designation, Certified Investment Management Analyst® (CIMA®) credential, and Certified Exit Planning Advisor (CEPA) credential. In her free time, Kendra enjoys traveling, cooking with her husband, and baking and decorating cakes. You can often find her hiking with her dogs or spending time with her husband and son Benjamin. She has been involved with Big Brothers Big Sisters of America (BBBS) for many years and is a member of the Young Professionals Advisory Committee for the Pittsburgh Foundation. To learn more about Kendra, connect with her on LinkedIn.
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(2) https://www.fidelity.com/viewpoints/personal-finance/plan-for-rising-health-care-costs