Is it Appropriate for You to Retire?
18 Questions Blog Series
At von Borstel & Associates, we ask our clients 18 critical questions. The answers to these questions determine how we partner with each client and manage their wealth. This week we’re talking about knowing when it’s appropriate to retire.
Follow along with us through the 18 Questions Blog Series. You may be surprised by what you discover about yourself and your financial plan!
#16 – Is it Appropriate for You to Retire?
The majority of people retire not only underfunded but without a plan. From a financial planning perspective, this is “crazy”! How do we help people stop this craziness?
Here are four questions I use to measure retirement suitability:
- When do you want to retire?
- How much do you need to live?
- How big does your financial nest egg need to be?
- What are your assets earning?
1. When do you want to retire?
Most importantly, I would suggest that you retire with a purpose.
Statistically, substance abuse, suicide, and divorce will go up at retirement because people lack motivation and a plan.
A time heralded as the happiest in our lives is followed closely by those three scary statistics. For some, watching TV most of the day would drive them nuts. Others will feel lonely after leaving relationships they cultivated at work. We need to find a purpose bigger than ourselves. Consider a charity or organization that can bring you joy and fulfillment to serve! Let’s set a date to retire with all this in mind.
2. How much do you need to live?
It is interesting to see how few people can answer that question. We must define the reality of what we need. Otherwise, our retirement is likely going to be an emotional nightmare. Let’s be realistic about your retirement and budgeting needs.
3. How big does your financial nest egg need to be?
How can you keep up with inflation, deal with unexpected expenses, and not outlive your assets? By living on less than 3% of your financial wealth! With that as a factor, we can calculate the total amount needed.
4. What are your assets earning?
One myth is that you should be more conservative with your assets in retirement, but this is not true! We will slowly go broke because of inflation if we take that advice. Every year we will have less and less purchasing power. We may need 2 to 3 times as much for the same lifestyle in twenty years.
We build our plan and decide how much we need when we need it, what we have, and how hard it works. Try graphing these four points on a chart – they will intersect where you should retire. If you want to retire at 62 and your lines intersect at age 84, you have five choices:
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Retire later
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Retire on less
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Invest more
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Make it work harder
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Do nothing
Doing nothing is a losing strategy. A mix of the other four items is the best way to be intentional about financial success. Our Vision to Wealth Process® helps you identify a plan that will allow you to retire the day you want with the lifelong income you desire!
Today is a great day to be intentional about your financial future!
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Investment advisory services offered through von Borstel & Associates, Inc., an SEC Registered Investment Advisor.
