You Can Have Plenty of Money and Still Worry About Retirement
You can have $5 million and still worry about running out of money.
That may sound irrational, but I don't think it is.
For most of your working life, the financial objective is fairly straightforward. Earn money. Save. Invest. Pay down debt. Keep building.
Then retirement approaches and the rules change. The paycheck that's arrived every two weeks for the past 30 or 40 years is about to stop. Instead of accumulating money, you're going to start spending it.
Suddenly, a large portfolio doesn't necessarily feel as large as it did before.
That's when we start hearing the question that sits underneath almost every retirement conversation:
Am I going to be OK?
Retirement Comes with Uncertainty
There are plenty of reasons even financially successful people worry about retirement.
How long will I live? What if the market falls right after I retire? What will healthcare cost? What if one of us needs long-term care? What if inflation stays high? What if taxes go up?
We can't answer those questions with certainty.
We don't know what the stock market will do next year. We don't know what tax rates will be 15 years from now. And none of us knows how long we're going to live.
A good financial plan shouldn't pretend otherwise.
What we can do is build a plan that doesn't require everything to go right.
What Happens If You Live to 95?
Living a long life is obviously something to hope for. Financially, however, it creates a challenge.
Someone retiring at 60 could need their resources to last 35 years or longer.
That's a long time for inflation to compound, markets to rise and fall, healthcare expenses to change, and unexpected things to happen.
So rather than trying to predict exactly how long you'll live, we can test the plan against a long retirement.
If you live to 95, does the plan still work?
If the answer is yes, we've taken one major source of uncertainty and put some boundaries around it.
What Happens When the Market Falls?
The stock market will fall during your retirement.
That's not a prediction. It's simply part of investing.
If you're retired for 20 or 30 years, you should expect to live through bear markets, recessions, scary headlines, geopolitical events, and periods when it feels like the market may never recover.
The time to prepare for those moments is before they happen.
When markets are calm, it's easy to say, "I'm a long-term investor." It's much harder when your portfolio is down significantly, the news is terrible, and every instinct is telling you to do something.
That's where mindset matters.
We want clients to go into retirement understanding that market declines aren't evidence that the plan has failed. They're something we expected when we built the plan in the first place.
We don't know when the next decline will happen or what will cause it. We do know that markets have always experienced difficult periods, and investors who panic and sell can turn a temporary decline into a permanent loss.
That's why we talk about this ahead of time.
When the market falls, we want to be able to say: We knew this would happen eventually. We planned for it. We don't need to panic.
That doesn't mean doing nothing. There may be opportunities to rebalance, harvest tax losses, raise cash from investments that have held up better, or make other adjustments. But those decisions should come from the financial plan, not from fear.
Our job during difficult markets is often as much about behavior as it is about investments. We want to help clients tune out the noise, remember why their portfolio was built the way it was, and avoid making a decision they will regret when the market eventually recovers.
A retirement plan should be built with bad markets in mind. If we've done that work properly, a market decline may be uncomfortable, but it shouldn't require us to abandon the plan.
We don't need markets to go up every year for your retirement to work. We need a plan that allows us to stay disciplined during the years when they don't.
What About Healthcare?
Healthcare is one of the expenses retirees understandably worry about most.
And unlike some retirement expenses, it can become more significant as we age.
We can't predict exactly what your healthcare costs will be at 82. But we can plan for premiums, out-of-pocket expenses, and the possibility that you or your spouse eventually need significant care.
For some families, insurance may be part of the answer. Others may have sufficient resources to self-fund much of the risk. Often it's some combination of strategies.
The point is not to predict the exact bill.
It's to make sure an unexpected healthcare expense doesn't threaten everything else you want your money to accomplish.
Inflation Doesn't Stop When You Retire
One of the easiest mistakes in retirement planning is focusing too much on the first year.
Suppose you determine that $150,000 a year will comfortably support your lifestyle when you retire.
Great.
But retirement might last 30 years.
At 3% inflation, something that costs $150,000 today would cost roughly $364,000 thirty years from now.
That's why a retirement portfolio still needs some ability to grow. Becoming too conservative can feel safe in the short term while creating a different risk over the long term: losing purchasing power.
The objective isn't avoiding every form of risk. It's understanding which risks you're taking and why.
What Can You Actually Control?
This is where retirement planning becomes useful.
You can't control the stock market. You can't control inflation. You can't control future tax laws, and you certainly can't control how long you'll live.
But you have much more control over other things. You can decide how much you spend.
You can decide when to claim Social Security.
You can structure a portfolio around your spending needs.
You can maintain appropriate cash reserves.
You can plan for taxes rather than simply reacting to them.
You can decide how much risk to insure and how much to retain.
You can update your estate plan. And you can adjust when circumstances change.
The purpose of a financial plan isn't to eliminate uncertainty.
It's to make uncertainty manageable.
Sometimes the Bigger Risk Is Being Too Cautious
This is the part of retirement planning that doesn't get discussed enough.
We've met people who spent their entire careers being responsible with money. They saved consistently, invested, lived below their means, and built more than enough to retire comfortably.
Then they retire and can't bring themselves to spend it.
Every vacation feels expensive. Helping the kids feels irresponsible. Flying business class seems extravagant. Buying the second home feels unnecessary.
The financial plan says they're going to be fine, but emotionally they're still operating as if every dollar spent threatens their future.
At some point, being too cautious has a cost too.
You can always make more money while you're working. You can't make more time.
The Conversation Changes Once You Know You're OK
One of the most important things we can do in financial planning is help someone understand what "enough" looks like for them.
Not a generic retirement number. Not some multiple of salary. Not what your neighbor has.
Your number. Your life. Your priorities.
Once we've established that you're going to be OK, the conversation can change.
Instead of asking whether you can afford retirement, we can start asking what you want retirement to look like.
Could you retire sooner?
Should you travel more while you're healthy?
Could you help your children or grandchildren now rather than someday through an inheritance?
Could you give more to causes you care about?
Could you spend more on experiences that will make the next 20 years better?
Those are much more interesting questions.
A Financial Plan Should Give Your Money a Purpose
Retirement planning isn't about eliminating every possible fear. That's impossible.
It's about understanding which risks actually threaten your financial security, preparing for the ones we can prepare for, and accepting that some uncertainty will always remain.
If the plan is strong enough to withstand a long life, difficult markets, inflation, healthcare costs, taxes, and the unexpected expenses that inevitably show up, then you can stop treating every unknown as a reason to be afraid.
You can start treating your money as a tool.
That's ultimately what we are trying to accomplish.
First, answer the question:
Am I going to be OK?
Then we can get to the more interesting one:
What does my money allow me to do?
If you'd like to talk about whether your retirement plan gives you the freedom to live the life you want, we'd be happy to help. Schedule a complimentary 15-minute call.
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This material was written in collaboration with artificial intelligence (ChatGPT) and derived from sources believed to be correct.
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