How do you help clients prepare for retirement transition?
When working with clients who are in the accumulation phase, we discuss both financial and emotional needs.
On the financial side, it’s about reducing your portfolio’s risk as we gradually prepare you for retirement. We look at how much money you’ve saved across your retirement accounts and whether it'll be enough to support your goals. We also discuss setting up a cash reserve or emergency fund for:
- Unexpected expenses like medical bills or a new car or roof.
- Daily living expenses should you lose your job. I encourage my clients to set aside three to six months of living expenses for a two-income household and six months of expenses for a one-income household. As you get closer to retirement, increase your savings to cover 12 months of expenses.
On the emotional side, it's about picturing what your ideal retirement will look like. Saving and being financially prepared are always topics of discussion. But it's also important to prepare yourself for the extra time you’ll have on your hands once your retirement honeymoon period is over.
During the first year, you might take that big trip you’ve always dreamed of, get your house and yard in order, and make plans to see friends. But in the second year, the new normal sinks in. And it’s not uncommon for my clients—especially those that were very career-focused—to lose sight of their sense of purpose.
Having structure in your life is essential whether you’re preparing for retirement or transitioning to it. It’s about identifying your next calling and the things that will get you out of bed in the morning. It could be spending time with family, focusing on new or old hobbies, going back to work, or doing something entirely different.
If you haven’t already, take some time to identify what your new sense of purpose will be in retirement.