5 Reasons to Retire

Key Points – 5 Reasons to Retire

Yearning for Financial Independence
Taking Advantage of Good Health While You Have It
What Are Your Retirement Goals?
The Clarity and Confidence Provided by a Financial Plan
11 Minutes to Read | 23 Minutes to Watch

Reviewing Five Reasons to Retire

Some people are more than ready to retire while others truly enjoy their jobs and don’t have retirement on their minds. What camp are you in? Well, either way, you need to have a financial plan.

If you’re one of those people who would retire today, maybe you can. But if you don’t have a financial plan, you won’t have the clarity and confidence to know when you can retire. And if you enjoy your job, that’s great. Still, you need to have a financial plan to prepare for retirement and to get an idea of what your retirement will look like.

The bottom line is that we want to help you live your one best financial life. Dean Barber and Bud Kasper are going to elaborate on that as they review five reasons to retire on America’s Wealth Management Show.

How Much Do You Need to Retire?

It’s safe to say that most people fall into the first camp of people that we mentioned. There are so many people want to retire sooner rather than later, but aren’t sure if they have enough money to retire. Dean and Bud are a couple of the exceptions. They know from their respective financial plans that they’re financially independent and can retire. That means that they can get up each day and do the things they want to do for the reasons they want to do them and not because you think they need a paycheck.

Dean and Bud get up every day and enjoy helping other people get to and through retirement with their knowledge of comprehensive financial planning. So, they’re choosing to continue working because they enjoy it.

They also know that they’re outliers by choosing to continue working when they know they have enough to retire. They’ve had countless occasions where they’ve met with someone who does want to retire but hasn’t had the clarity and confidence to do so because they didn’t have a financial plan. There have been so many times that Dean and Bud have built a financial plan for someone and shown them that they can retire sooner than expected.

But even after our CFP® Professionals build a plan, things like prolonged market downturns can make some people unsure about retirement (even though we stress test people’s plans against prolonged market downturns). If you’re on the fence about retirement, pay close attention to our five reasons to retire. We’re going to quickly highlight the five reasons to retire before going over each one in more detail.

Five Reasons to Retire

You’re Done Working; You’re Looking for Freedom
Time Is Your Most Valuable and Scarcest Resource
Eventually, Health Is Going to Be a Factor
You Have Goals for Retirement
You Have a Financial Plan and Know You Can Retire Confidently

1. You’re Done Working; You’re Looking for Freedom

The first reason to retire is one we’ve already alluded to. You’ve worked for several years, have been saving for retirement, and are mentally ready to retire. Even if you have enjoyed your career, we’re guessing that you probably have some things you’re wanting to do in retirement that you might not be able to do as much as you’d like because you’re still working.

We alluded to being financially independent earlier. Retirement done right is truly a feeling of freedom. At Modern Wealth, it’s our goal to provide you confidence that you’re doing the right things with your money, freedom from financial stress, and time to spend doing the things you love. And speaking of time…

2. Time Is Your Most Valuable and Scarcest Resource

Our second reason to retire is to make sure you’re spending as much time as possible with your loved ones, family, friends, etc. Dean and Bud shared last week on America’s Wealth Management Show that time is your most valuable and scarcest resource in retirement.

Obviously, doing all the things you want to do in retirement requires time, and you want as much of it as possible. The earlier you start planning for retirement to know what you want your retirement lifestyle to look like, the better.

You need to step into the future and reverse engineer from a financial perspective to get the answer of where you are today in relation to where you want to go in the future. If you can’t step into the future to say what you want your future to look like, your financial plan is nothing more than numbers.

“The very first part of the process that we go through with people is a prioritization exercise. We have a long conversation with one spouse and then a long conversation with the other spouse about what’s important to them and what they want to do. Once we understand what’s important to each spouse, we have them prioritize together as a couple. Sometimes they’re aligned; sometimes they’re not aligned at all. So, sometimes there are some compromises so that both spouses get to enjoy that freedom that they finally gained with the confidence they have to know they can do what they want with their time in retirement.” – Dean Barber

Your Retirement Timeline

We recommend that people start planning for retirement at least five to 10 years out from when they want to retire. We also have a resource for you that can give you a jump start on gauging your retirement readiness. Our Retirement Plan Checklist outlines 30 yes-or-no questions that can give you a better idea about where you stand in your journey to retirement. It also includes date-based and event-based timelines of things to consider as you’re nearing retirement. Download your copy below to get the ball rolling on planning for your retirement.

Download: Retirement Plan Checklist

3. Eventually, Health Is Going to Be a Factor

Another topic Dean and Bud touched on during last week’s episode was the different types of wealth. One type of wealth is your health, which is our third reason to retire. You may be forced to retire due to an illness, spouse’s illness, or to care for an elderly parent.

Like we said earlier, health and time are really intertwined when it comes to reasons to retire. Coming to the realization that your health is going to deteriorate over time is a reason to retire sooner so that you have more time while you’re healthy to do the things you want to do.

“Maybe that stemmed from witnessing a parent, friend, or someone else you knew get sick and couldn’t do the things they wanted to do. It’s realizing that life is finite and mortality is unknown. You may think, ‘While I’m healthy, let’s do this.’ Or it could be the opposite where you don’t have much time left because you know you’re sick or your spouse is sick and you need to stop working. Health is a big deal. Without your health, wealth is meaningless.” – Dean Barber

The Impact of a Long-Term Care Stay

If your health gets to a point where you require a long-term care stay, obviously that has a huge impact on you. But it’s not just about you. Think about the rising costs of long-term care and the impact it has on your spouse and the rest of your family.

And the Impact on a Surviving Spouse

Not to be morbid, but long-term care often marks the beginning of the end of one’s life. So, what are some of the impact of a death of a souse on the surviving spouse?

“If you’re on Social Security, the surviving spouse gets to the higher of the two benefits. There are so many elements that come into play that are associated with that. One of my clients had a 180-degree turn with their health. They came back in to meet with me because they wanted to have another check in since they were in a different situation.” – Bud Kasper

Front Loading Your Spending in Retirement

We hope that you and yours can live a long and healthy life that’s full of fun and adventures. But even if you remain in good health, you’re going to want to slow down at some point. So, make sure you live it up in the early years of retirement in terms of traveling and doing the things you love. Many of those things have a cost associated with them as well, so it oftentimes makes sense to front load your spending in retirement.

“We know that nobody is going to continue to spend in their early years of retirement in their later years of retirement. So, maybe you’re front-loading your spending and spending more in your early years of retirement.” – Dean Barber

4. You Have Goals for Retirement

Our fourth reason to retire is to live out your lifetime goals. What goals and dreams do you have for retirement? Everyone has different things that are important to them. It’s important have those things in mind as you’re planning for retirement.

“Our CFP® Professionals at Modern Wealth have counseled hundreds and hundreds of people over the years to get them to and through retirement and helping the next generations. I don’t think that I’ve had two clients that have had identical goals.” – Dean Barber

It’s easy during your career for your job to become your identity. Well, what’s your identity going to be in retirement? That’s why you need to identify the things that are important to you prior to retirement.

Retiring without a plan of how to spend your that precious time we discussed, is a retirement wasted. What do you want to do in retirement?

“People have these goals, these visions of doing things that they’ve always wanted to do. Maybe it’s an around-the-world cruise or something as simple as taking the family to Disney World. A lot of times people want to realize their goals and that’s the reason they want to retire. But if you don’t have confidence that you can do that, you’re never going to give yourself the freedom to experience it. That’s where we come back to the financial plan.” – Dean Barber

Your Goals Will Change

Your goals aren’t going to stay the same throughout retirement. As your life changes, your goals will change. The beautiful thing about having a financial plan is that if your priorities and goals change, it only takes a five-to 10-minute conversation with your CFP® Professional to talk about what that really means to adjust the inputs into the plan to give you the answer if it’s OK.

“I have several clients in Arkansas and about a month ago, I drove down there to check in with them. This lady’s husband passed away about 10 years ago. He was just about into his third year of retirement. They had all their dreams set and were financial secure. But now she’s missing the motivation of having her husband by her side, which was a key part of her retirement. The emotions associated with that are always going to be in place. But if there is something that we as financial planners can do that’s over and above what the mechanic of the numbers are, that is where relationships are built and trust comes into play.” – Bud Kasper

The Coordination Between Spouses

If you’re married, you obviously have more than your personal goals to think about in retirement. What about your spouse’s goals? Sure, some of them you might know and you might have some of the same goals. But Bud and Dean have seen several times when meeting clients for the first time where one spouse finds out something about the other spouse related to retirement goals that they didn’t expect. That’s why it’s so important to start the retirement planning process at least five to 10 years from when you think you want to retire so that you and your spouse are on the same page about retirement goals and can build a plan so that you can achieve them.

5. You Have a Financial Plan and Know You Can Retire Confidently

That’s the perfect segue to our fifth reason to retire, which is having a financial plan that gives you the confidence to retire. That financial plan also includes a forward-looking tax plan, so your CFP® Professional and CPA should be working together.

That way you know from a financial perspective that if you never work another day in your life that you’re going to be fine. So, you can retire and rediscover who you are and what’s important in your life. If you’ve been working for 35, 40, 45 years, you really haven’t had time to explore who you are. Your identity is your job, and that’s a very dangerous place to be.

“That’s one of the biggest reasons why people should start financial planning in their early 50s and really nail down what it’s going to take to wake up one morning and say, ‘I’m doing what I’m doing today because it’s exactly what I want to do. I know if I never earn another dollar that I’m going to be financially independent for the rest of my life. When you get to that point, you have the freedom to step back to reassess your life and rediscover what’s important to you.” – Dean Barber

The Financial Planning Process

Your financial plan allows you to understand that you’re covering all your bases—income, health care needs, etc. In the process of understanding that, you need to execute the plan and then review the plan.

“At Modern Wealth, we usually review the plan every six months. Our planning meeting is rather extensive because we’re bringing in our CPAs and other subject matter experts to have discussions with our clients to make sure we’re tracking in the direction that our clients want to. After that, the meetings aren’t as long because we’re really doing check-ins. Are things moving in the right direction? Is the market impacting your plan? That’s the essence of partnering with a firm that can help you deliver on the results and expectations that you have for yourself and your family.” – Bud Kasper

Setting Up a Spending Plan for Retirement

Reviewing your plan has been very important over the past 12-18 months thanks to things like inflation and rising interest rates. How has all that impacted your budget? Let’s say that you had decided that you want $7,000 net a month to spend once this inflationary cycle started. Is that still enough? We account for inflation in your plan and assume that there’s going to be an automatic cost-of-living increase. Still, most people will continue to live on that set amount unless they’re given permission from their CFP® Professional that it’s OK to spend more.

“I had a review with a long-time client couple and the husband was concerned about the technical aspects of the plan—taxes, asset allocation, investment allocation, asset location, etc. We spent about 30 minutes talking through that. Then, the wife says, ‘Let’s get to the important stuff. What’s our probability of success? What’s our number?’ She wanted to know if they could keep spending the way that they had been spending and that they’re not putting anything into jeopardy.” – Dean Barber

What’s Your Probability of Success?

So, Dean had the plan updated and ready to go and they were at a 97% probability of success. That meant that 97% of the time, they could accomplish all their goals without needing to adjust their spending. And 3% of the time, they might need to make some adjustments, but it doesn’t mean that there’s a 3% chance of their plan failing.

They were at 97%, but the husband told Dean that their bank account was getting big, so they weren’t spending everything Dean was sending them. The wife was surprised by that and the husband ended up telling the truth that they weren’t. They were spending $5,000 total a year on their three granddaughters and the wife wanted to know if they could spend more because some of the things they like to do for them have become more expensive. So, Dean wanted to see what doubling that total to $10,000 would do to the plan.

“It changed it from a 97% probability of success to a 97% probability of success (that’s not a typo—it didn’t change; it’s just one of Dean’s jokes). So, I’d told them it was OK. His reason to retire was because he worked for years as an engineer and was burnt out. Her reason to retire was all about time with the people that she cared about.” – Dean Barber

Start Building Your Plan Today

Now that we’ve covered all these reasons to retire, it’s time to start planning for retirement, even if you do really like your job. And if you have achieved financial independence, there’s no reason why you can’t start achieving some of your retirement goals while you’re still working. But you won’t know if you’ve achieved financial independence until you’ve built your financial plan.

We’re giving you a unique opportunity to do exactly that with our industry-leading financial planning tool. Keep all these reasons to retire in mind as you’re building a plan that gives you confidence, freedom, and time in retirement. You can start building your plan from the comfort of your own home and at no cost or obligation by clicking the “Start Planning” button below.

START PLANNING

We also can’t emphasize enough the importance of working with a CFP® Professional that works with a CPA. If you have questions about these reasons to retire or have some other reasons to retire, it’s time to get a conversation started with a CFP® Professional. Whether it’s a 20-minute “ask anything” session or complimentary consultation, you can schedule a meeting with one of our CFP® Professionals by clicking here. We can meet with you in person, virtually, or by phone depending on what works best for you.

5 Reasons to Retire | Watch Guide

Introduction: 00:00
5 Reasons to Retire: 02:24
You’re Done Working & Time: 04:15
Health: 11:13
Goals for Life: 13:40
Having a Financial Plan: 16:17
Conclusion: 22:26

Resources Mentioned in This Episode

Other America’s Wealth Management Show Episodes

Downloads

Retirement Plan Checklist

Investment advisory services offered through Modern Wealth Management, LLC, an SEC Registered Investment Adviser.

The views expressed represent the opinion of Modern Wealth Management, LLC, an SEC Registered Investment Adviser. Information provided is for illustrative purposes only and does not constitute investment, tax, or legal advice. Modern Wealth Management, LLC does not accept any liability for the use of the information discussed. Consult with a qualified financial, legal, or tax professional prior to taking any action.