Thinking about Retirement ...
Let’s focus on what we can control….
Prior to COVID-19, you may have been thinking, or dare I say, planning your retirement. With Coronavirus dominating recent attention, our focus is drawn to the present and the thought of retirement may now be in the future. This is understandable; when uncertainty strikes, it’s only natural, and in some cases, it may be wise.
But let’s go back to that thought of retirement, with perhaps a slightly different perspective or timeline, but with a focus on what we can control. There are several pieces to the retirement puzzle: including expenses (or spending), longevity, inflation, investment returns, and more. There is only one of these that we can truly have control over - our EXPENSES.
Expenses
If you previously identified your retirement expenses – go back and determine where your flexibility is. Consider breaking your projected retirement expenses into three buckets; Needs, Wants, and Wishes. This might help you identify what in your spending you could cut if needed.
If you haven’t taken the time to estimate your retirement expenses, now might be a good time to do so. Determine the lifestyle you believe God would have you retire to and the annual costs of that lifestyle. Here's a tip, look at the cost of your current lifestyle (what are you currently spending?). Then break out your projected expenses into the same three buckets – Needs, Wants, and Wishes.
Flexibility
Even with the most sophisticated analysis and retirement planning, FLEXIBILITY (having the ability to adjust your expenses if things don’t quite go the way you plan) could be the key to your success in retirement. Or you may find that you're willing to forgo some of those expenses or "wishes" in retirement in order to retire sooner rather than later. Either way, economic uncertainty is bound to happen again. Markets go up, and markets go down. Therefore, don’t let it derail your plans; know where your flexibility is. In other words, if the markets are significantly down, what expenses might you and your spouse be willing to forgo? So that, if (or when) the unexpected happens, good or bad, you both know where or how you might adjust.