Continued from the Last blog …..
But regardless of our profile, thoughts usually creep in with a focus on how we can possibly live off the savings we’ve put away. And the scary question to ask is “What if I discover later that my savings fail to support my retirement, what do I do then?” As we answer that question, we acknowledge that fewer employers want to hire individuals our age and we are less likely to earn the income we now depend on if we go back to work. This simply makes us ask the next question “what happens next if I quit my current occupation?”
If we happen to be closer to the “Extreme Spender” leading up to retirement, then the common decision is to likely stay put in a job we no longer feel challenged or wish continue. The other not so popular choice is deciding to downsize expenses such as vacations, house size or entertainment until forced to do so. In this case, it's very apparent why we would not want to spend our savings, but what is not apparent is why we would resist spending clearly when we have more than enough savings for retirement.
But let's assume that we have saved enough to fund our income needs after retirement. This would possibly mean we have been a better saver vs. spender. Let's also assume that either we worked through our financial plan with an advisor or alone and determined that we financially can continue or even improve our pre-retirement lifestyle.
So why do I see retiree’s in this situation continue to experience a fear of spending during retirement? I’ve come to believe it has to do with how they viewed their savings during their career. Savings for many investors represented a safety net in addition to their current income generator. So during their career, if anything happened to their income they knew they could dip into their savings until they found the next income generator. Therefore, when retirees leave their income generator and replace it with their savings they emotionally no longer feel they have a safety net. This leaves the constant concern and fear of spending that often disrupts the enjoyment of spending.
Often one solution to solve this dilemma is to build a safety net into our investment/savings that again allows us to sleep at night. One suggestion for a safety net could very well be paying off our mortgage. To find our safety nets I would recommend thinking about the “what if’s” and have plans for those situations. Will the future go according to how our “what if” plans indicate? Often the answer is No. However, I can tell from experience that it's easier to modify previous “what if” plans than it is to create a solution on the fly from scratch while under pressure.
And to my business owner readers, I would tell you that planning your retirement is often more difficult because it’s likely 85% of your income will be based on the value you receive from selling your company. And determining the sale value is not an exact method. You may find yourself also carrying part of the sale value in a note to the buyer. This also adds another dimension of risk to your retirement income vs. employees retirement income.
Your comments and thoughts are welcome…