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Conquering Your Fear of Retirement

financial anxiety retirement planning Mar 08, 2022
Yields for You
Conquering Your Fear of Retirement

My wife and I are complete opposites. In most areas of life, I am a cautious person. I like to think and plan and understand the decisions I am making. It helps me calm the voices in my head, ease the self-doubt and help me have confidence in the decisions I make. I talk a lot about my process in my book. My wife, on the other hand, will rush headlong in to figure it out on the fly. Her attitude pushes me to take action and have experiences I would never have on my own. 

There are few things in life that are scarier than retirement. Making that decision to put our old life behind us and forge a new path, one that is completely our own – is hard, scary, and there are few safety nets.

If you’ve been looking at the markets lately and have been scared, that is okay. Anyone who has lived through the dot-com crash, the Great Financial Crisis, or the multiple COVID-induced crashes, has every right to be scared.

Seeing your account values rise gradually over time, then drop quickly, is alarming.

The thought of “Is it happening all over again? Am I going to lose half my life’s savings?” is scary.

This scarcity mindset is similar to what many people who survived the Great Depression had. Today’s Baby Boomers are the children of that generation. They were witnesses to their parents pinching every last penny. As kids do, boomers rebelled against their parents by indulging in excess. Now that those in their 50s to 70s see market volatility, they might wonder if there was something to the wisdom of their parents.

As someone who has worked with retirees before, after and during the ’08-09 crash, here is my advice:

  1.  Protect Your Downside. What makes retirement tricky is that the investing strategy is turned around. All the forces, that worked for you as you saved, now suddenly work against you. Time is not on your side since you don’t have years to wait for the market to recover. You need income now. At Yields4U, we have a “Risk Allocation” methodology. This method buckets safe assets for near-term expenses. With some of your investments in lower volatility strategies, we can be more aggressive with money reserved for longer-term needs. By separating your immediate needs from your future needs, you gain psychological breathing room.
  1.  Have a Sound Plan. Without a sound plan and thinking through what could happen, you are doomed to fail. Few retirees have a grasp on how much they will spend during their golden years. We work with our clients to help them consider lifestyle questions such as:

 Where will you live?

 What vacations do you want to take?

 What happens if you get sick and need long-term care?

 What if your breadwinner passes away prematurely?

Planning can help you prepare for the unexpected.

  1.  Re-evaluate Your Plan Each Year. Life constantly changes. A one-time plan does not cut it. It’s important to review your plan annually to ensure all risks are considered and your goals are on track. 
  2. Enjoy Your Retirement. Regardless of how much money you have amassed, be sure you are intentional about enjoying it. Maybe you have a bucket list—live out those dreams with confidence, knowing that you have made the right money moves. Where there is a will, there is a way. Giving yourself permission to enjoy the retirement you have earned opens all kinds of new doors and opportunities to live your best life!

At the end of the day, there is only one way to get over your fear of running out of money: having the confidence of knowing you are making the strongest financial decisions for you and your loved ones. If the market drops, you can rest easy with the comfort that you have planned for such an event. If you overspend, that’s ok, too…because you’ve got a plan and a process in place.

To learn more about how to implement these strategies in your life, download a copy of my free guide: "7-steps for building the life of your dreams"

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