A Top Issue Financial Planning Clients Are Facing Due To The Pandemic

Contributed by: Sandra Adams, CFP®

We are approaching a year of living in what many are calling the “new normal”.  While the future remains unknown, last year provided us with the opportunity to reflect on what is most important in our lives.

When the health of ourselves and the ones we love is threatened, it sparks the reevaluation of our top priorities. During the Covid-19 pandemic, advisors at The Center found that clients are most concerned about the wellbeing of their families instead of short-term market volatility. Additionally, we have had more conversations about charitable giving and the causes clients want to support, especially now when so many people are in need.

I have had many conversations with clients in 2020 that reminded me of a book by Simon Sinek called “What is Your Why?” The book is about helping people find clarity, meaning, and fulfillment to find their purpose. Helping clients find their purpose is woven into the fabric of The Center. It has never been more evident and meaningful than in the last year. Even pre-Covid, after working together to learn what the client wants/needs, we can begin using their financial resources towards those goals – aka helping them LIVE THEIR PLAN.  While the past year may have shifted some of those goals (or delayed some of them – like travel, etc.), I believe that Covid-19 provided extra time, allowing many to focus on their most important goals – their WHY’s.

If you are interested in a financial planner and want to discover your “Why’s”, please reach out.  We would be happy to help you focus on narrowing those down and put those into action steps so that you can ultimately LIVE YOUR PLAN™.

Sandra Adams, CFP®, is a Partner and CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® and holds a CeFT™ designation. She specializes in Elder Care Financial Planning and serves as a trusted source for national publications, including The Wall Street Journal, Research Magazine, and Journal of Financial Planning.

How to Decide Where to Live in Retirement

Contributed by: Sandra Adams, CFP®

One of the issues for most retirees, once you have determined that you are ready to retire and can afford to do so, is where you want to live in retirement? This, of course, is a loaded question. There are so many factors that go into making this decision, and it is as much emotional as it is financial. I could certainly write a detailed commentary on this topic, but here we will provide some bullet points to provide some issues and decision points to consider.

Location, Location, Location.  For the majority of people, the most important decision in making the retirement living decision is the location. Will you remain in your pre-retirement community that you are familiar with?  Where are your friends, connections and social contacts?  Or will you make a change, perhaps to a different or warmer climate? To a more rural setting?  Or maybe closer to the city where health care, transportation, resources and cultural activities are more accessible?  You may decide to move closer to family at this point in your life — this may be a dangerous proposition — as growing and maturing families tend to move again just as you move to be near them, leaving you again stranded in a place where you know no one.  You may find that it is more important to find a location where you can be near friends that you can socialize with, that you have commonalities with and that will provide mutual support.

Once the location is determined, the physical space becomes important.  Will you stay in the same home you’ve always lived in and “age in place”?  If you decide to do that, it may become necessary to take a good hard look at your home and make sure that it is equipped to be safe and easy for you to live in for the next 20 – 30 years or so of your retirement, if that is your plan. And if you truly do wish to stay in your own home to age (according to a recent survey by the National Council on Aging, 9 in 10 seniors plans to stay in their own home to age), you have to plan ahead to make things as safe and accommodating for yourself and your spouse as possible, so there is not a need for you to need to move to an assisted living or nursing care facility in the unfortunate case that you have a medical emergency and your home is not equipped for you to stay there.  

For those who don’t desire to stay in their pre-retirement home, there are endless choices:

• You might decide to downsize to a smaller home, condo or apartment.

• You might choose to move into a senior-only community so that you can associate with people that are in the same life situation.

• You might choose to live in a multi-generational planned community.

• You might choose to live in a shared home situation — think of older adults sharing the same living space, expenses, and providing support and resources with one another (circa the Golden Girls).

• You might decide to move in with or share space with family members.

So, how do you go about making your decision about where and in what kind of house/housing facility to live in retirement?      

• Develop your criteria – What kind of climate are you looking for?  How active do you want your social life to be? What kind of access do you want to health care and other facilities? Make a list and search locations that fit your criteria.

• Identify neutral professionals to guide you

• Do a trial run

• Consult your family

• Put together a transition team

To move or not to move, that is the question.  And even making not to move — aging in place — does not mean that there are no choices or changes to make.  But if you do decide to make a move, it is a process that takes planning, and one that should not be taken lightly. Give the process serious consideration — it is a large part of your potential retirement planning picture.

Sandra Adams, CFP®, is a Partner and CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® and holds a CeFT™ designation. She specializes in Elder Care Financial Planning and serves as a trusted source for national publications, including The Wall Street Journal, Research Magazine, and Journal of Financial Planning.

7 Ways The Planning Doesn't Stop When You Retire

Contributed by: Sandra Adams, CFP®

Most materials related to retirement planning are focused on “preparing for retirement” to help clients set goals and retire successfully. Does that mean when goals are met, the planning is done? In my work, there is often a feeling that once clients cross the retirement “finish line” it should be smooth sailing from a planning standpoint. Unfortunately, nothing could be further from the truth. For many clients, post-retirement is likely when they’ll need the assistance of a planner the most!

Here are 7 planning post-retirement issues that might require the ongoing assistance of a financial advisor:

1. Retirement Income Planning 

An advisor can help you put together a year-by-year plan including income, resources, pensions, deferred compensation, Social Security, and investments.  The goal is to structure a tax-efficient strategy that is most beneficial to you.

2. Investments 

Once you are retired, a couple of things happen to make it even more important to keep an active eye on your investments: (1) You will probably begin withdrawing from investments and will likely need to manage the ongoing liquidity of at least a portion of your investment accounts and (2) You have an ongoing shorter time horizon and less tolerance for risk.

3. Social Security

It is likely that in pre-retirement planning you may have talked in generalities about what you might do with your Social Security and which strategy you might implement when you reached Social Security benefit age. However, once you reach retirement, the rubber hits the road and you need to navigate all of the available options and determine the best strategy for your situation – not necessarily something you want to do on your own without guidance.  

4. Health Insurance and Medicare

It’s a challenge for clients retiring before age 65 who have employers that don’t offer retiree healthcare. There’s often a significant expense surrounding retirement healthcare pre-Medicare.

For those under their employer healthcare, switching to Medicare is no small task – there are complications involved in “getting it right” by ensuring that clients are fully covered from an insurance standpoint once they get to retirement.  

5. Life Insurance and Long-Term Care Insurance

Life and long-term care insurances are items we hope to have in place pre-retirement. Especially since the cost and the ability to become insured becomes incredibly difficult the older one gets. However, maintaining these policies, understanding them, and having assistance once it comes time to draw on the benefits is quite another story.  

6. Estate and Multigenerational Planning

It makes sense for clients to manage their estate planning even after retirement and until the end of their lives. It’s the best way to ensure that their wealth is passed on to the next generation in the most efficient way possible. This is partly why we manage retirement income so close (account titling, beneficiaries, and estate documents). We also encourage families to document assets and have family conversations about their values and intentions for how they wish their wealth to be passed on. Many planners can help to structure and facilitate these kinds of conversations.

7. Planning for Aging

For many clients just entering retirement, one of their greatest challenges is how to help their now elderly parents manage the aging process. Like how to navigate the health care system? How to get the best care? How to determine the best place to live as they age? How best to pay for their care, especially if parents haven’t saved well enough for their retirement? How to avoid digging into your own retirement pockets to pay for your parents’ care? How to find the best resources in the community? And what questions to ask (since this is likely foreign territory for most)? 

Since humans are living longer lives, there will likely be an increased need and/or desire to plan. In an emergency, it could be difficult to make a decision uninformed. A planner can help you create a contingency plan for potential future health changes.

While it seems like the majority of materials, time, and energy of the financial planning world focuses on planning to reach retirement, there is so much still to do post-retirement. Perhaps as much OR MORE as there is pre-retirement. Having the help of a planner in post-retirement is likely something you might not realize you needed, but something you’ll certainly be glad you had.

Sandra Adams, CFP®, is a Partner and CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® and holds a CeFT™ designation. She specializes in Elder Care Financial Planning and serves as a trusted source for national publications, including The Wall Street Journal, Research Magazine, and Journal of Financial Planning.

Why COVID-19 Has Clients Postponing Retirement

Contributed by: Sandra Adams, CFP®

Going into 2020, none of us had any idea what we were in for. The coronavirus came upon us like an unanticipated hurricane. It is sticking around much longer than anticipated and is threatening to be around indefinitely. Many of us are on the verge of “pandemic fatigue”! While some have felt a short-term economic impact, any longer-term impacts will likely show themselves later.

For most clients nearing retirement, their goals are very much on track given the minimal impact of the virus on investment markets, employment, and savings SO FAR in 2020. However, the bigger concern for most clients looking at retirement is what their actual retired life may look like in the new world of COVID-19. 

Many clients have been living in a world of quarantine. They are working remotely, socializing less, and communicating mostly via phone/video. The new world lacks the pleasures of travel, dining out, and group events. While this eases the budget, it’s not the life anyone desires to live every day in retirement. The retirement dream that clients work so hard to achieve is one in which they are traveling, visiting family, socializing with friends, volunteering, pursuing hobbies outside of the home, maybe taking classes, and/or pursuing a new job or career. Generally, none of these are activities that will be COVID-compliant, at least until the virus is under control or a vaccine is developed. For this reason, several clients have expressed the desire to delay their retirement date and continue working if we are still living in a COVID world. After all, “Why would I want to retire and sit at home in quarantine?”

As long as clients are working towards retirement, important financial goals should be:

• Continue contributions to employer retirement plans

• Build reserve savings to serve as a startup for future retirement cash flow

• Carefully track budget cash flow to make sure you have a good sense of what you will need for retirement income

• Reduce debt as much as possible before retirement

Its times like this that I’m reminded that for many, the non-financial side of the retirement decision is just as important as the financial side. 

If you or someone you know is approaching retirement and would benefit from having a conversation with one of our financial planners, please let us know. We are always happy to help!

Sandra Adams, CFP®, is a Partner and CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® and holds a CeFT™ designation. She specializes in Elder Care Financial Planning and serves as a trusted source for national publications, including The Wall Street Journal, Research Magazine, and Journal of Financial Planning.

COVID-19 and Your Money: Know These 4 Easy Financial Tips

Contributed by: Sandra Adams, CFP®

The coronavirus pandemic has taken us by storm. The virus has been devastating both financially and psychologically for many across the world. It has changed the way we will likely live our lives forever and forced us to slow down and think about things differently. Here are the top financial lessons that COVID-19 has helped us to see a little clearer...lessons that may be worth holding onto even after the pandemic is behind us.

1. Stick To A Budget

   It is easy for budgeting to take a backseat when times are good. We may find ourselves spending money on unnecessary items because we aren’t paying attention. The pandemic forced many to take a hard look at their expenses due to loss of income and free time. Many cut back on those “extras” they didn’t need, didn’t want, or weren’t using. They found ways to be more frugal without impacting the quality of life. Also a major plus: family time at home didn’t cost anything.

2. Have An Emergency Reserve Fund

   As in any financial crisis or economic slowdown, having emergency reserves can save you if hours are cut or a job is lost. While you can collect unemployment, there is often a gap in it getting paid out. Having emergency reserves, enough to get you through several months’ worth of expenses can be a lifesaver in these situations. The truth is, the majority of the U.S. population does not have this. If you do not have an emergency reserve fund…make this your goal before the next crisis!

3. Update Your Estate Plan

   People of all ages suddenly realized it might not be too soon to make sure their estate planning documents are in order. Durable Powers of Attorney and Wills (and potentially a Trust if applicable) used to put off most younger folks until they started to have families or until they felt like they had accumulated “enough” in assets. The sudden threat of a virus that could take your life at any age suddenly made these documents more important. Even more so with anyone over the age of 18 needs to have their Durable Powers of Attorney as their parents are no longer able to make legal, financial, or medical decisions on their behalf. Many COVID-19 patients were taken to facilities alone and not allowed to have a family member accompany them.

4. Get Life Insurance

   The pandemic caused a surge of folks to wonder if they were sufficiently covered from a life insurance standpoint. Many were younger families who had not yet accumulated sufficient assets to support their spouses and children long-term. While less common, COVID-19 deaths have appeared in the young adult group. If those families did not have sufficient life insurance, their surviving members were left in a devastating financial situation. It’s extremely important to make sure one always has sufficient life insurance coverage until they have the time to accumulate assets to support their families later in life. More young folks need to get life insurance; middle-age clients need it if asset accumulation is behind schedule. 

While COVID-19 has greatly impacted our lives, we can certainly learn from it. Consider implementing these 4 lessons. We are certain to learn more lessons from COVID-19, but this is a good place to start!

Sandra Adams, CFP®, is a Partner and CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® and holds a CeFT™ designation. She specializes in Elder Care Financial Planning and serves as a trusted source for national publications, including The Wall Street Journal, Research Magazine, and Journal of Financial Planning.

Why We Grow Happier With Age

Contributed by: Sandra Adams, CFP®

Having had a “milestone” birthday at the end of last year, I came across a book recently that caught my attention. The Happiness Curve: Why Life Gets Better After 50 by Jonathan Rauch seemed like a book that I had to read – who wouldn’t want to know how and why life was going to start getting better!?!  I was completely intrigued by this book. It is backed by the personal experience of the author, actual case studies, and long-term social research.  So, what did I learn?

Research indicates that life satisfaction declines in your forties. Despite being dubbed as having a “midlife crisis”, your forties are less of a crisis and more of a sense of despair. Why could this happen?

• We realize that we’re not going to achieve everything we once imagined

• We compare ourselves to others who’ve achieved more and question our self-worth

• We lack gratitude and feel shame or embarrassment

However, by age 50 (or shortly thereafter) our “sour” mood changes and we begin to feel more life satisfaction. As each decade passes, our happiness “ranking” gets even higher.

• We become less focused on our own goals and become more focused on serving others

• We accept our life and focus on personal relationships instead of external achievements

• We stop comparing ourselves to others and focus more on our own internal satisfaction

Key takeaways:

• Be self-aware of the psychology behind your feelings

• Know that the “midlife crisis” isn’t forever and better times are ahead

• The future is an opportunity to live our happiest and most socially satisfying years

For those who are focused on the negatives of aging such as an ailing body or a failing mind, I challenge you to pick up The Happiness Curve to get a different perspective on your future retirement years. What you learn just might surprise you! If you’d like to have a conversation about this topic or additional topics around retirement or longevity planning, feel free to contact me at sandy.adams@centerfinplan.com.

Sandra Adams, CFP®, is a Partner and CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® and holds a CeFT™ designation. She specializes in Elder Care Financial Planning and serves as a trusted source for national publications, including The Wall Street Journal, Research Magazine, and Journal of Financial Planning.

Retirement Planning Challenges for Women: How to Face Them and Take Action

Contributed by: Sandra Adams, CFP®

If we are being completely honest, planning and saving for retirement seems to be more and more challenging these days – for everyone.  No longer are the days of guaranteed pensions, so it’s on us to save for our own retirement.  Even though we try our best to save…life happens and we accumulate more expenses along the way.  Our kids grow up (and maybe not out!).  Our older adult parents may need our help (both time and money).  Depending on our age, grandchildren might creep into the picture.  Add it all up and the question is: how are we are supposed to retire?  We need enough to potentially last 25 to 30 years (depending on our life expectancy). Ughhh!

While these issues certainly impact both men and women, the impact on women can be tenfold.  Let’s take a look at some of the major issues women face when it comes to retirement planning.

1. Women have fewer years of earned income than men

Women tend to be the caregivers for children and other family members.  This ultimately means that women have longer employment gaps as they take time off work to care for their family.  The result: less earned income, retirement savings, and Social Security earnings. It can also halt career trajectory. 

Action Steps

• Attempt to save at a higher rate during the years you ARE working. It allows you to keep pace with your male counterparts. Take a look at the chart below for an estimated percentage of what working women should save during each period of their life.

• If you are married you may want to save in a ROTH IRA or IRA (with spousal contributions) each year, even if you are not in the workforce.

• If you are serving as the caregiver for a family member, consider having a Paid Caregiver Contract drawn up to receive legitimate and reportable payment for your services. This could potentially help you and help your family member work towards receiving government benefits in the future, if and when needed.

2. Women earn less than men

For every $1 a man makes, a woman in a similar position earns 82¢ according to the Bureau of Labor Statistics.  As a result, women see less in retirement savings and Social Security benefits based on earning less.

Action Steps

• Again, save more during the years you are working.  Attempt to maximize contributions to employer plans. Also, make annual contributions to ROTH IRA/IRAs and after-tax investment accounts.

• Invest in an appropriate allocation for your long term investment portfolio, keeping in mind your potential life expectancy.

• Be an advocate for yourself and your women cohorts when it comes to requesting equal pay for equal work.

3. Women are less aggressive investors than men

In general, women tend to be more conservative investors than men.  Analyses of 401(k) and IRA accounts of men and women of every age range show distinctly more conservative allocations for women.  Especially for women, who may have longer life expectancies, it’s imperative to incorporate appropriate asset allocations with the ability for assets to outpace inflation and grow over the long term.

Action Steps

• Work with an advisor to determine the most appropriate long term asset allocation for your overall portfolio, keeping in mind your potential longevity, potential retirement income needs, and risk tolerance.

• Become knowledgeable and educated on investment and financial planning topics so that you can be in control of your future financial decisions, with the help of a good financial advisor.

4. Women tend to live longer than men

Women have fewer years to save and more years to save for.  The average life expectancy is 81 for women and 76 for men according to the Centers for Disease Control and Prevention.  Since women live longer, they must factor in the health care costs that come along with those years. 

Action Steps

• Plan to save as much as possible.

• Invest appropriately for a long life expectancy.

• Work with an advisor to make smart financial decisions related to potential income sources (coordinate spousal benefits, Social Security, pensions, etc.)

• Make sure you have a strong and updated estate plan.

• Take care of your health to lessen the cost of future healthcare.

• Plan early for Long Term Care (look into Long Term Care insurance, if it makes sense for you and if health allows).

5. Women who are divorced often face specific challenges and are less likely to marry after “gray divorce” (divorce after 50)

From a financial perspective, divorce tends to negatively impact women far more than it does men.  The average woman’s standard of living drops 27% after divorce while the man’s increases 10% according to the American Sociological Review. That’s due to various reasons such as earnings inequalities, care of children, uneven division of assets, etc.

The rate of divorce for the 50+ population has nearly doubled since the 1990s according to the Pew Research Center. The study also indicates that a large percentage of women who experienced a gray divorce do not remarry; these women remain in a lower income lifestyle and less likely to have support from a partner as they age.

Action Steps

• Work with a sound advisor during the divorce process, one who specializes in the financial side of divorce such as a Certified Divorce Financial Analyst (CDFA) (Note:  attorneys often do not understand the financial implications of the divorce settlement).

6. Women are more likely to be subject to elder abuse

Women live longer and are often unmarried or alone.  They may not be as sophisticated with financial issues.  They may be lonely and vulnerable. 

Action Items

• If you are an older adult, put safeguards in place to protect yourself from Financial Fraud and abuse. For example: check your credit report annually and utilize credit monitoring services like EverSafe.

• Have your estate planning documents updated, particularly your Durable Powers of Attorney documents, so that those that you trust are in charge of your affairs if you become unable to handle them yourself.

• If you are in a position of assisting an older adult friend or relative, check in on them often. Watch for changes in their situations or behavior and do background checks on anyone providing services.

While it is unlikely that the retirement challenges facing women will disappear anytime soon, taking action can certainly help to minimize the impact they can have on women’s overall retirement planning goals. I have no doubt that with a little extra planning, and a little help from a quality financial advisor/professional partner, women will be able to successfully meet their retirement goals. 

If you or someone you know are in need of professional guidance, please give us a call.  We are always happy to help.

Sandra Adams, CFP®, is a Partner and CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® and holds a CeFT™ designation. She specializes in Elder Care Financial Planning and serves as a trusted source for national publications, including The Wall Street Journal, Research Magazine, and Journal of Financial Planning.

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Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification and asset allocation. Raymond James is not affiliated with EverSafe.

The cost and availability of Long Term Care insurance depend on factors such as age, health, and the type and amount of insurance purchased. These policies have exclusions and/or limitations. As with most financial decisions, there are expenses associated with the purchase of Long Term Care insurance. Guarantees are based on the claims paying ability of the insurance company.

Things to Consider if You are Anticipating an Inheritance

Contributed by: Sandra Adams, CFP®

If you are like most clients, anticipating an inheritance likely means that something is happening, or has happened, to someone you love. Often this means dealing with the complexities of grief and loss, in addition to the potential stress of additional financial opportunities and responsibilities. Combining your past money experience and your relationship with the person you are losing or have lost can cause varying degrees of stress.

Based on our experience with clients who expect to receive an inheritance, we offer a few suggestions that will serve you well and help you avoid some of the common pitfalls:

• Avoid making big plans to upgrade your home, buy the fancy car, or take the exotic trips. In other words, don’t spend the money before you have it.

• Don’t let others pressure you into quick decisions or coax you into making purchases or gifts that you wouldn’t normally make.

• Don’t make any big purchases until you have taken the time to do more purposeful planning.

• Take an intentional time-out from decision-making. Give yourself the ability to grieve, and to make sure your head is clear and ready to make smart financial decisions.

• In the planning process, determine what will change, or has changed, for you since receiving the inheritance (income, savings, investments, expenses, home, etc.); this information will help guide your financial planning decisions with the inherited funds.

• Identify your current and future financial goals, then plan so that inherited funds help you meet those goals.

Even if you have a financial plan and are an experienced investor, receiving an inheritance can throw you for a loop from an emotional standpoint – and from a planning standpoint – when you rush to make decisions. If you have no experience with money, receiving an inheritance can seem completely overwhelming and stressful. In either case, having a financial planner – a decision partner to provide assistance, guidance, and a sounding board – can be invaluable. If you expect, or know someone who expects, an inheritance and could use some guidance, please contact us for assistance (Sandy.Adams@CenterFinPlan.com). We are always happy to help!

Sandra Adams, CFP®, CeFT™, is a Partner and CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® She specializes in Elder Care Financial Planning and serves as a trusted source for national publications, including The Wall Street Journal, Research Magazine, and Journal of Financial Planning.

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Any opinions are those of Sandra D. Adams, CFP® and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Investing involves risk and you may incur a profit or loss regardless of strategy selected.

Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™ and CFP® in the U.S.

Planning for Retirement when Unexpected Events Occur

Contributed by: Sandra Adams, CFP®

This year, more than ever, I have found myself meeting with clients in the prime of their retirement planning years who have experienced some unexpected life events – events that might not normally be part of the retirement planning process.

What am I speaking of? I have had young pre-retirees experience terminal illnesses or become caregivers for spouses or family members, experience the loss of a spouse, experience divorce after a very long marriage but before retirement, and most recently, I have had some lose their long-time jobs with recent layoffs at companies like General Motors.

Losing a job is just one of many unexpected, pre-retirement events that can potentially throw savings goals and plans off course. Some may add that a very negative or extended stock market decline can also hinder retirement and, in most cases, is unexpected. As the old saying goes, you should always “expect the unexpected”.

What can you or should you do now to make sure that you can keep your retirement strategy on track, even if one of these unexpected events comes creeping into your life?

1. Plan Early and Update Often. Although many folks don’t like to think about it, start digging into how much you much income you will need in retirement. If your income projection is significantly less than you are bringing home now, what will change in retirement to make you need less income? Will you have significantly less debt? Will the activities you plan to do in retirement cost significantly less? Be realistic. Take stock on a regular basis of where you are towards your savings goals versus your needs, so that you stay on track and are able to update your strategy if you are not moving toward those goals.

2. Save, Save, and Then Save a Little More. When times are good, and while you can, stretch yourself to meet your savings goals. There is a delicate balance between spending to enjoy your life now and setting aside funds for your retirement. It makes sense to set significant retirement savings goals (especially if you didn’t start as early as you wanted to). And making it a habit to save more – even one percent each year – will help you reach or exceed your retirement savings goals. Other ways to get ahead can include allocating a portion of your annual raise or any bonus you might receive to retirement savings. Aim to save, save, and save a little more to put yourself in a position to absorb the unexpected.

3. Take Control of What You Can Control. While you cannot control what happens to the markets, your job (for the most part), or your health (other than eating right and exercising), there are things you can control. You can control your savings rate: You can be disciplined about saving, save regularly and continue to save more over time. You can save in the right places: You can attempt to max out your savings within your employer retirement savings plans on a tax-deferred basis, you can have a liquid cash emergency reserve fund of at least 3-6 months of expenses “in case” something unexpected comes up, and you can have an after-tax investment account and/or ROTH IRA (if your income tax bracket allows) in case a life event causes an earlier-than-expected retirement or a temporary unemployment situation. You can keep debt under control and plan to have as much debt paid off as possible going into retirement. Reducing fixed costs during retirement allows you to use your cash flow for wants versus needs, and provides you with greater flexibility if an unexpected event occurs.

4. Put Protections and Guardrails in Place. Planners like to call this “risk management”. We are talking about protection for contingencies, so they don’t sink your retirement ship. Having a reserve or emergency savings account is a good first step. But what else might you put in place? It’s important to have the right insurances – disability insurance, life insurance, and long-term care insurance. Continuing education and networking are also important protections – WHAT? Keep up your credentials and training, so that if your current job is phased out, you are prepared to quickly jump back on the horse and become re-employed. Many folks become complacent, and if something unexpected happens with their company or their role, are completely unprepared to seek new employment. Unfortunately, the U.S. Government Accountability Office estimates that older workers wait more than 40 weeks to become re-employed, so being prepared can make all of the difference.

5. Seek Good Advice. This is not a time to DIY. Way too many things can go wrong when it comes to a potential early retirement transition. Seeking the advice of a trained professional can help you find the best course of action. In most cases, assessing your specific situation and making the best possible decisions, especially when it comes to things like pensions, Social Security, and which accounts to tap for retirement income, can make a huge difference.

“The more things change, the more things stay the same” – Jean-Baptiste Alphonse Karr

When we do an initial financial plan for a client, we like to say that something will very likely change when the client walks out the door, and we will need to adjust the plan. Life happens. A financial plan must be fluid and flexible. And so must you, as someone who is planning for retirement. Unexpected events that happen just as you are reaching for the golden doorknob to retirement can be frustrating. But if you have expected the unexpected, planned for the contingencies, and have some spending flexibility built into your plan, you will be on your way to a long and successful retirement.

Sandra Adams, CFP®, CeFT™, is a Partner and CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® She specializes in Elder Care Financial Planning and serves as a trusted source for national publications, including The Wall Street Journal, Research Magazine, and Journal of Financial Planning.

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Opinions expressed in the attached article are those of Sandra D. Adams and are not necessarily those of Raymond James. All opinions are as of this date and are subject to change without notice. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. 401(k) plans are long-term retirement savings vehicles. Withdrawal of pre-tax contributions and/or earnings will be subject to ordinary income tax, and if taken prior to age 59 ½, may be subject to a 10% federal tax penalty. Roth 401(k) plans are long-term retirement savings vehicles. Like Traditional IRAs, contributions limits apply to Roth IRAs. In addition, with a Roth IRA, your allowable contribution may be reduced or eliminated if your annual income exceeds certain limits. Contributions to a Roth IRA are never tax deductible, but if certain conditions are met, distributions will be completely income tax free. Prior to making an investment decision, please consult with your financial advisor about your individual situation.

Certified Financial Planner Board of Standards Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design), and CFP® (with flame design) in the U.S., which it authorizes use of by individuals who successfully complete CFP Board's initial and ongoing certification requirements.

Can You Change Your Spending Habits in Retirement?

Contributed by: Sandra Adams, CFP®

I recently had some interesting conversations with clients, many of whom have been exceedingly good savers during their entire adult lives. These clients most often grew up in households that modeled frugality and modesty in spending, and they have followed suit. As they plan to enter the ranks of the retired, they find themselves with more saved than they are likely to spend, based on the lifestyle to which they have become accustomed. So now what?

In our conversations about “what could you spend” and “spending on things that would bring value and meaning to their lives,” these clients still struggle in many cases to imagine needing or wanting to spend even a fraction of the excess that they have accumulated. Why? I like to say it is because changing your spending “stripes” later in life is just hard to do.

When clients have learned to live a certain way with money, making significant changes may simply not be comfortable. Clients have shared stories about the challenge of hunting down the best clearance deals, something they do to compete with friends, or the fun in finding the best travel deals, even though they can afford to pay top dollar. And while circumstances may dictate how they spend their wealth in the future, these clients wouldn’t spend it now any other way. They have built the lives they want and enjoy. 

On the flip side, we work with clients who have developed lifestyles that are extremely “high-end” and keeping up with that lifestyle in retirement can take an extreme amount of saving and planning, particularly with longevity in the mix. Conversations with these clients about what expenses can be cut in retirement can be difficult. Even though some expenses go away (mortgages get paid, etc.), added expenses like travel, hobbies, etc., might come into play, especially in early retirement. Once you have become accustomed to a lifestyle, it is hard to cut back. I have found that many clients, given the choice, will work longer or save more prior to retirement rather than take less retirement income (i.e. cut back on their retirement lifestyle).  

So the answer to the question: Can you change your spending habits in retirement?

Probably not. Habits developed over a lifetime are very difficult to break.

My best suggestion:

Work with a financial advisor earlier rather than later to develop a retirement savings plan that allows you to spend whatever you want for your retirement lifestyle. The earlier you start your plan, the better your chance for success. If you or anyone you know needs assistance with developing a retirement savings plan, contact our Center Planning Team. We are always happy to help.

Sandra Adams, CFP®, CeFT™, is a Partner and CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® She specializes in Elder Care Financial Planning and serves as a trusted source for national publications, including The Wall Street Journal, Research Magazine, and Journal of Financial Planning.

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Opinions expressed are those of the author and are not necessarily those of Raymond James. All opinions are as of this date and are subject to change without notice. The information contained in this blog does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Investing involves risk and investors may incur a profit or a loss regardless of strategy selected. Prior to making an investment decision, please consult with your financial advisor about your individual situation.

Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.