Posted by  Denise Kovach, CFP®, AIF®, NSSA®

First, don’t treat retirement as the destination! It’s actually the beginning of the next part of life. It’s easy for people who are still working to think of retirement as an end goal, but it is a mistake if you only concentrate on reaching the finish line with no fuel to keep going afterward. Keep in mind that your retirement could last longer than your working career, so you will need to have your assets last. I have had clients say to me: “I plan to retire in a year or two so I think I need to invest much more conservatively.” Portfolios may need to be tweaked, but it’s certainly not time to put on the brakes!

Having said that, don’t avoid investment risks. Reducing volatility and lowering risks in retirement may make sense, but not everyone can afford to buy only CDs or low yielding bonds for the rest of their life and still maintain their desired lifestyle. Inflation is a huge factor and it will destroy any conservative investment strategy given enough time.

Many people think they will spend 70% – 80% of their previous salary in retirement.  But is this really the way to build a budget? I would begin by putting together a list of necessary expenses and then add additional expenses that will benefit you. For each cost, ask yourself if spending that money will actually make your life better, or is the expense just there because it’s always been there? A couple of years prior to retirement you may want to live on this budget to see if it makes sense for you.

Don’t go into retirement thinking that it will solve all of your problems, because that’s just not going to happen. Yes, you will have less stress from work and more free time, but retirement may bring about some other challenges you didn’t have when you were working, such as declining income, loss of health insurance and increased healthcare costs.

Also, you don’t want to carry any problems you have while you are working into your retirement… so fix them now. Burnt out from work? Find another job. No time to pursue your passion? Find the time by becoming more productive. If you don’t live a balanced life now, there is no guarantee that your retirement will be any different.

Finally, don’t stop being active. Stay fit and healthy, both physically and mentally.

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