Financial goals after retirement
Saving for retirement is typically the most significant goal one will have over their lifetime. And the reality is, you’ll reach retirement with or without a goal, because we’ll eventually have to stop working one way or another. Regardless of how you got to retirement, once retired, you should at least have the goal of making your money last as long as you do. However, there could be other goals as well, so once retired, ask yourself: What are my financial goals now?
Most retirees will review their savings balance every year from the standpoint: Is it higher or lower than I expected at this time? Are things on track as planned or expected? Does that constitute the goal after retirement? I would say no. It is not sufficient by itself because it doesn’t answer how or when expenses will change in the future, health or other family impacts, and the assumptions you made about the future. I’ll use the analogy of walking across the United States. You can have an initial route mapped out day by day, but the chance that the trip will follow that exact plan is almost 0. Between weather impacts, a few blisters, and receiving advice on a better route, you will adapt the plan as you progress to the destination, at least adjusting your estimate of how far you can go every day due to the experience gained after walking for a week or two. Our path ahead is always a best estimate. The same applies to post-retirement planning - it’s best to have a plan that gets reviewed and updated over time.
Besides making it to the end before running out, goals could include paying educational expenses for grandchildren, money for charity, or a round-the-world trip for your 75th birthday. One way to strive to meet such goals is to put them into your post-retirement plan. Perhaps you’ll plan to allocate $25,000 for each of your three grandchildren. If using a post-retirement planner, such as my Retirement Yearly Plan spreadsheet, simply add the one-time or yearly expenses to the future years when they are expected to occur. Then, as the years pass, if you’re at all concerned that your savings balance is trending too low, either cut back or remove those gifts. [A financial planner would follow the same approach if you communicated your desire for the grandchildren.] This approach also allows you to move the future expenses around, if needed. Market down the last two years? Then, maybe delay your round-the-world trip by a year.
Without having an in-retirement plan, you could unknowingly lose the ability to add goals at a later date. For example, from retirement at 65 to 75, you spend freely as your balance doesn’t drop as expected, so you start spending a little more. Everything’s fine, then along come the three grandchildren, and now, at 75, you really don’t have the extra to put toward their education as you would like to. You either can’t help them, or if you do, you’re putting your own financial security at risk. Of course, any spending on the goals mentioned comes after ensuring you and your spouse’s well-being throughout your old age years.
For those in retirement who have not thought about financial goals, it’s never too late. If you’d rather decide to leave whatever remains to others as instructed in your will or trust, that’s your choice. In my case, I’ve laid out some of these “goals” in future years. When the time comes, if I decide not to travel, I can re-purpose the amount or just not spend the money. But it’s there in the plan today.
Come to think about it, all of these in-retirement goals are like the bucket list. You either have one and have planned out the spending necessary to complete it, or you don’t have one. Either way, you’re going to kick the bucket someday, accomplishing some meaningful things in retirement or not, and what’s left is left.