Retirement is a beautiful season, but it’s also ripe with change, which can lead to worry and anxiety. You’re leaving the safety of a steady job behind to enter a new, financially independent lifestyle.
The transition to retirement may be laden with twists and turns, but I want to help you make it as fruitful and fulfilling as possible. To start, I’ve identified five ways where women can strive to find confidence in retiring on their own terms.
Tip #1: Define your purpose
Change is scary, and there are few changes in life more significant than the transition to retirement. One of the most prevalent fears that can occur during this time is not having a purpose for your next phase in life.
But as it turns out, purpose is more than just a nice thing to have. It can actually help you live longer! A recent JAMA study found that those over 50 who scored higher on specific life purpose metrics lived longer than those who didn’t.[^1 ]
While you may have spent years preparing financially for retirement, how much time have you put into defining what you want your retirement to look like? Without a job to report to every day, what will you do to create a fulfilling life?
I like to compare preparing for retirement to putting together a jigsaw puzzle. Once you connect the edge and corner pieces to create a frame, deciding how to put the rest of the puzzle together can be challenging.
That’s why I encourage my clients to step back and look at the big picture (i.e., the image on the box). Starting with a vision for what you want your retirement to look like can help create the roadmap to putting the pieces together.
Say you’re super passionate about travel in retirement since you had a job that kept you in one place your whole life. That’s an excellent place to start. Perhaps to support that goal, you want to be sure to plan one “big” trip and two “smaller” trips per year. If the big trip is abroad, maybe you want to learn enough of the language to be conversational or find someone to rent out your house while you’re gone.
As you can start to see, you can break down your big goal into smaller, more manageable steps, so it becomes part of your lifestyle.
It’s critical to think about what will give your retirement purpose and fulfillment. Build a routine you enjoy doing, nurture your hobbies or interests, and create new social connections. Now’s the time to prioritize your big picture by focusing on your goals, values, and vision.
Tip #2: Know how much you can actually spend
Roughly 87% of people worry about having enough income to support their lifestyle in retirement.1 An effective way to alleviate that fear is knowing how much you can spend.
Where can you start? Create a comprehensive retirement budget that accounts for both big-ticket spending (like vacations, home remodels, buying new properties, etc.) and everyday costs (housing, food, utilities, taxes, insurance, etc.). Essentially, we want to break down how much it costs to be you.
Together, you and I can look at what you’re spending now and how we can strive to maintain that lifestyle in retirement.
Putting a price tag on your retirement wants and needs gives you the starting point to determine how much you need to save now and how much you’ll have to spend later. Knowing you’ve already accounted for costs later can give you the much-needed confidence to spend the money you’ve worked so hard to save.
Tip #3: Understand your income sources
There’s no better way to reduce worry in retirement than to know exactly where your money is coming from.
How do we do this? By creating your “retirement paycheck.” Instead of your paycheck coming from an employer, your new paycheck comes from various savings and investments.
To determine how much your monthly retirement paycheck will be, we’ll consider all sources of income, including fixed (savings bonds, Social Security, annuities, CDs, etc.) and variable (such as stocks and dividends).
Once we’ve listed every income source, you and I can find ways to optimize that income. For example, we can determine the best time for you to collect Social Security benefits or which pension payout is best.
Our goal is to create a withdrawal plan that maximizes your dollars and builds confidence in your ability to maintain your spending in retirement.
Tip #4: Make an ongoing tax plan
Taxes can be one of the most significant roadblocks to a woman’s wealth in retirement. That’s why proactive tax planning is critical for women heading into retirement. Taking the necessary precautions now can help keep more of your money working for you and support your goals.
It’s important to differentiate between proactive tax planning and filing your tax return year after year. I work with women and their families to make tax-minded financial decisions all year round.
If you haven’t already, I encourage you to listen to this episode of Women’s Retirement Radio, where I discuss tax planning for women in retirement with Alicyn McLeod of Atlanta Tax.
Tip #5: Most important of all, live abundantly
When properly planned for, retirement should be a time of abundance and joy. Living your life from an abundance mindset is key to finding happiness and meaning during your time of newfound financial independence.
Bonus tip: Create a comprehensive wealth plan
A successful, fulfilling retirement is built on the foundation of a comprehensive wealth plan. My passion is helping women build the confidence to retire on their terms.
As you consider what you want your retirement to look like, don’t hesitate to reach out. Together, we can create a retirement plan with your goals, values, and big picture in mind.