Breaking Down Retirement Barriers for Successful Retirement

A determined-looking woman breaks through a brick wall.

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What a year this has been in our economy, geopolitically and especially for the financial markets. For many people who are retiring or nearing retirement, these issues are on top of some significant barriers to getting ready for their golden years.

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During much of the past 13 years, the markets have produced positive returns, according to Macrotrends, and thus provided many a feeling that their golden years would be full of financial security and stability. However, the events of this year appear to have caused many of those positive feelings to shift to anxiety and worry about what the future holds.

Properly preparing for your retirement should not be ignored, especially during times like this. Barriers to taking the proper action have seemingly always existed. Whether it is not actually making time to plan or even knowing where to begin, preparation for the next phase of life should not be ignored, especially in times like these.

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Let’s explore some of those retirement barriers and possible solutions:

Retirement Barrier: You’re Paralyzed by the Volatility in the Markets

Because so much recent attention has been given to the volatility in the financial markets, it can feel “all-consuming” to watch as our investment balances and future nest eggs fluctuate to levels many haven’t experienced in years. This is causing many to feel “paralyzed” to do anything other than “bury their heads in the sand” until this volatility passes.

Solution: It has been said for years, but “control what you can control!” We really have no say over what happens in the markets, but you can still take positive action toward developing and implementing meaningful retirement strategies. Understand that your retirement could last for years, which means this is probably not the last time we’ll see markets like this, so let’s take action to potentially avoid retirement being altered in the future.

Retirement Barrier: You Don’t Have a Retirement Mindset

Understand that your retirement is more than just a collection of “uncoordinated” investment accounts that you have built over the years. Retirement is about moving from the “accumulation” phase of life to the “preservation and distribution” phase of life. Realize there are very distinct differences between being a good saver and knowing how to preserve and spend wealth. Think of climbing Mount Everest and the different challenges faced going up that mountain vs. coming back down.

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Solution: Understanding all the areas of your own “financial house” and how you may need to take a more active approach to things that were once on “autopilot.” For example, during your working years, you had the ability to earn a paycheck. However, now you will need to “create” your retirement paychecks through a combination of the wealth you have accumulated, Social Security timing and pension elections (if applicable).

In addition to managing investments, a strong retirement blueprint should include a plan for creating predictable monthly income, tax minimization strategies, health care options and legacy planning. Regardless of what is currently happening in the financial markets, these are five areas of your retirement that you can effectively plan.

Retirement Barrier: You Don’t Know Where to Begin

Just like many other aspects of life, knowing how and where to begin preparing for transition into retirement can be the hardest part. Realize that you are in the majority if this part of the process can seem overwhelming and cause you to procrastinate. Pushing through and taking small first steps will help create the momentum you need.

Solution: First, understand what exactly you need and what exactly you want. For example, do you actually want and are you committed to developing a broad retirement plan that includes investment management, income planning, tax strategies, legacy desires and health care? There’s a significant difference between wanting and needing an adviser or a portal to manage investment accounts or purchase an insurance product. Once you assess and determine what you actually need, you’re ready to tackle the next barrier.

Retirement Barrier: You Don’t Understand the World of Advisory Services and Platforms

All advisers and platforms are not created equal. Some platforms are tailored to those who prefer to self-manage retirement vs. those designed with a more comprehensive offering of advice and services. Some of these can be low-cost investments for the do-it-yourselfers, those who want investment management for a fee or those who are more comprehensive- and planning-centered.

Solution: Let’s break down your options.

Do-it-yourself platforms. These are designed for those who prefer to manage their own retirement but need access to low-cost brokerage accounts such as those offered by Vanguard and TD Ameritrade. Advice may be limited with these platforms and typically designed for those wanting to design their own investment strategies.
Investment- or product-focused. Many advisers offer services dedicated primarily to investment management. Advice may be given in exchange for a fee, which usually is a percentage of the assets being managed. Advisers could also focus their practice on offering insurance-based solutions and products such as annuities, life insurance or even long-term care policies, any of which could have value if used to fill a particular need.
Planning-centered. Advisers who have a planning-centered practice will usually focus their efforts on designing, recommending and implementing financial strategies that are more comprehensive than just investment management or product selection. Areas of focus usually do involve investment management but could also include retirement income planning, tax strategies, health and long-term care options and estate considerations. Fees may include either an annual asset-based fee, a one-time planning fee or a combination of both. In summary, advisers in this space are normally focused on making recommendations and choosing solutions (both investment and insurance) based on your retirement in totality.

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Let’s get focused on controlling what we can control and removing those barriers in preparation for an amazing retirement.

Investment Advisory Services offered through Trek Financial LLC, (Trek) an SEC Registered Investment Adviser. Information presented is for educational purposes only. It should not be considered specific investment advice, does not take into consideration your specific situation, and does not intend to make an offer or solicitation for the sale or purchase of any securities or investment strategies. Investments involve risk and are not guaranteed, and past performance is no guarantee of future results. For specific tax advice on any strategy, consult with a qualified tax professional before implementing any strategy discussed herein. Annuity guarantees are backed by the financial strength and claims paying ability of the issuing insurance company. Financial products and services if recommended may include investment advisory fees, commissions and/or other charges. TREK 455

Disclaimer

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

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Nicholas Toman, CFP®, is a lead retirement planner and investment adviser with Empowered Financial Management, a firm that specializes in retirement planning for those individuals within five to seven years of retirement or who have recently retired and no longer wish to serve as their own financial adviser. Nicholas is a graduate of the University of Wisconsin-Whitewater with a BBA in accounting and has been a Certified Financial Planner since 2014.