How do you transition from a retirement saver to spending for retirement?

Transition from Retirement Saver to Retirement Spender

You’ve spent your working life saving for the big day when you switch to spending for retirement, but how do you do it?

It actually can be quite scarier to switch modes. We can develop the cash flows and model these changes, but psychologically it is still a little disconcerting.

So where do you start? Budget is not one of those nasty four letter words, but it has a similar reputation. The good news is you have your records that will help you identify your everyday living expenses. Simply look at the last year’s records and come up with your expenditures for everything from utilities to insurance payments to clothing and entertainment. Some of these will decline in retirement and others will actually increase.

Next look at your income items like Social Security, pensions, annuities, rental income etc. – all of your steady, regular monthly income sources. If you include this in your expenditure spreadsheet, you will now know how much additional income you will need.

If this number is positive you’re in great shape, the resources you will need from your retirement accounts will be limited to funding major expenditures, gifts, and your legacy plans.

If the number is negative, you will need to come up with a spending plan to drawdown your investment accounts. This can be somewhat challenging to come up with a plan or methodology on how to start to spend down these funds recognizing these will need to last a lifetime. There are a number of variables to take into consideration in this part of the planning process such as: life expectancy, investment returns, asset allocation, drawdown factor, etc.

It may be time to contact a professional financial planner to help you develop and plan out the various options available to you to have a successful retirement plan.

As a financial planner, I will help you understand where you are financial, help you identify your goals, create a plan to utilize your resources effectively so you will know what your retirement may look like.