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Sather Financial Group

120 E Constitution St
Victoria, TX 77901

(361) 570-1800



 

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Easing Into Retirement

Perceptions about aging and retirement have changed dramatically over the past several decades. Not only are we living longer, but we are more active in retirement. This often brings excitement, as well as anxiety.

Fifty years ago, most expected to retire at 65 and live 10 years in retirement. Now, we routinely see clients live into their 90’s. This trend will continue as modern medicine extends a “normal” life span.

Additionally, the safety blanket of a pension is gone for most of us and social security struggles to keep up with inflation.

This combination has put immense pressure on the average person to stretch their finances for a longer, and more expensive, retirement than ever before.

As such, a few thoughtful considers can help you navigate your golden years.

Retirement is often a “one shot” decision in which you have to time it correctly. Once you leave the workforce for more than two years, it is virtually impossible to return. Industry contacts move on and the skill-set we use deteriorates very quickly.

If at all possible, don’t take Social Security early. Early Social Security greatly lowers the amount you receive the rest of your life along with all future increases. It also lowers the survivor benefit a spouse may receive. As such, a husband and wife need to coordinate Social Security benefits together.

We all have one body and one brain. Keep them in shape. Not only must you stay active physically, but recognize the brain is the most important muscle of all. Enroll in continuing education classes, get a degree or learn to weld. Set yourself a goal of going to bed each day a little wiser.

Much of the work we do has changed. Instead of a manual labor job, much of what we do is intellectually based. Wisdom grows with age. If your job requires thinking for a living, don’t turn your back just as you are getting good at it. If you are physically able, age 65 is merely a number.

Your favorite hobby can become a chore. As such, know what you will do each day. Give yourself a reason to get out of bed and be challenged. Go back to school or volunteer. Most charitable endeavors would fail if not for the effort of the retiree community. Find the ones that resonate most with you.

If you are burned out at your job, consider re-tooling your skill-set. Get training to pursue an occupation that stirs your passion. If you struggle with what you are best at, consider aptitude testing. All our staff and many clients go through aptitude testing at the Johnson O’Connor Research Foundation in Houston or Dallas. It provides a solid roadmap to follow in assessing the training or education needed for the rest of your life.

Work part time. Not only does this keep your hand in the game, but it keeps cash flowing in too.

Downsize your house. Once the kids are gone, evaluate the need for a mansion. A large house costs more in insurance, property tax, utilities and maintenance. Do you really want to spend your golden years cleaning gutters?  If you are worried about where the grandkids will stay when they come to visit, spring for a hotel. Don’t let your possessions own you.

Many seniors should consider renting a place in retirement. Renting offloads the burden of insurance, property tax and maintenance and leaves you to enjoy your days. When I suggested this to my father, he didn’t think too much of the idea. However, after he pulled up to his house to a flooded garage and a busted water heater, the idea gained acceptance.

Ditch the land yacht. Few of us need to haul 8 people on a daily basis. As such, why do you want to haul all that extra weight around town? Get a solid, low maintenance four door to get you around. Like a house, the costs of ownership are much lower.

Keep distributions from investment accounts to 3% to 4% of asset value. This distribution rate puts the odds in your favor that your assets will last your entire life.

Retirement will be more expensive than you think. As such, being more conservative in the early years will provide a necessary cushion when you need it most.

Dave Sather is a CERTIFIED FINANCIAL PLANNER and owner of Sather Financial Group. His column, Money Matters, publishes every other week.