Polka dots with stripes. Navy and black. White after Labor Day.
These are all style trends that, while at one time were major faux pas, are now widely embraced. If Oprah gives her blessing for white pants in the fall, who are we to argue?
While most people develop their own distinct fashion style (I personally love the classic Johnny Cash black on black), it is equally important to have a vision for your retirement “style.”
When you think of retirement, what comes to mind? Traveling the world? Becoming a Master Gardener? Perfecting your golf game? The hobbies and interests you want to devote your time, energy, and financial resources to are all part of your retirement style.
At Pathfinder Wealth Consulting, we take a comprehensive look at your desired retirement lifestyle to help you achieve all your goals. Most financial planners know the importance of creating a realistic spending plan for retirement, including fixed and variable expenses; however, it is also important to look at discretionary spending. When going from a scenario where all living expenses are funded through working income to one where everything is funded through saved assets, it is important to have an idea of spending expectations to build a realistic financial plan.
There are many “rules of thumb” when forecasting future spending – such as 75 to 80 percent of preretirement income – but our team of CERTIFIED FINANCIAL PLANNER™ professionals take a more realistic and individualistic approach and build a spending plan geared towards specific goals. One such goal may be to save funds to travel, but this is definitely not a one-size-fits-all idea.
We have clients who had strong careers in sales, and while they enjoyed the opportunity to see the world through their professional travels, they are now looking forward to spending more quiet time at home tinkering on projects.
In practice, we see that, in the first few years of retirement, people will spend more than their preretirement income. This is when most folks are working through bucket list items they’ve put off for many years.
Early in retirement, your style may revolve around seizing the day, making up for all those years behind a desk. During this time, your living expenses may dramatically increase just by eating out more and having the time and energy to attend events.
We always get tickled when a client brings in a budget they’ve scrubbed through, with the tightest spending parameters possible. We appreciate the hard work and value their commitment to their financial plan. However, this shouldn’t always be the case.
While it is extremely important to have a plan and execute it well, it is equally imperative to leave some wiggle room for discretionary spending. Without this “fluff” to account for the things you like to splurge on, budgets often feel rigid and unattainable… and these inflexible budgets are usually the first to be busted.
At Pathfinder, we also understand that your retirement style will evolve, which is why we utilize a strategy that plans for higher spending in the first few years, then adjusts over time to account for less discretionary spending later in life. Just like your fashion style tends to change, so does your retirement style. It is important to check in with your Financial Planner on at least an annual basis if major decisions or changes come up.
Whether your style is laid back and comfortable or bold and adventurous, we would be honored to help you develop a financial plan to help make your retirement dreams come true. Please give us a call, (910) 793-0616, or visit our website, www.PWCPath.com, for more information.
Katie Henderson is Marketing Director for Pathfinder Wealth Consulting, an independent financial planning and investment management firm in Wilmington. Pathfinder’s comprehensive financial planning process is driven by a step-by-step process that will direct each individual down the path of developing their financial goals and putting them into action.