Many people think of retirement as a switch, where you look out and decided you're going to retire at a certain date, then you flip the switch and turn off work and start doing, well, whatever retired people do. It's not so easy a transition however! Many people struggle to transition from a life of working, saving, and planning to a life of spending, free time, and pursuing activities you didn't have time for in your working years -- all while no longer bringing in a paycheck. It's one thing to draw up financial projections and plan for this transition. As Matt says, you can plan and project and calculate that you are safe to spend $10,000 a month in your retirement years, but it's a whole nother thing to actually see that $10,000 flow out of your bank account. Matt proposes that retirement doesn't have to be a hard switch -- one day you're working, one day you're retired. There are many things you can, and should, test out during the transition phase: Take a long vacation, a few weeks, and see how it feels to be away from work. How do you fill your time? Are you energized by the time off? Bored? This can give you clues as to what you find fulfilling at the workplace and how you could create that in retirement. Cut down to a couple workdays per week, and see how easy or difficult it is to fill your free time. Perhaps you find that you enjoy working part-time and aren't ready to leave work entirely. Spend some time with your grandkids and help out more often. Maybe you'll discover that you want to move where they are. Matt calls this the retirement "dress rehearsal" and it's an important part of the planning process. You can run all sorts of financial projections to get comfortable with the possibility of retirement, but having a vision of life in retirement is much more difficult. A financial plan is only as good as its assumptions, and the assumptions around your lifestyle -- how much you will need to spend, where you will live, how often you will travel, etc -- can change quite a bit once you retire. By testing the waters before you officially retire, you can begin to build that vision of your wisdom years, and grow more confident in your financial plan in the process. Follow Matt Murphy Web: https://www.benetaswealth.com Newsletter: http://eepurl.com/jb7SNc LinkedIn: https://www.linkedin.com/in/mattmurphycfp Advisory services offered through Commonwealth Financial Network®, a Registered Investment Adviser. This material is intended for informational/educational purposes only and should not be construed as investment advice, a solicitation, or a recommendation to buy or sell any security or investment product. Please contact your financial professional for more information specific to your situation. Investments are subject to risk, including the loss of principal. Some investments are not suitable for all investors, and there is no guarantee that any investing goal will be met. Past performance is no guarantee of future results. All indices are unmanaged and investors cannot invest directly into an index. Investments in target-date funds are subject to the risks of their underlying holdings. The year in the fund name refers to the approximate year (the target date) when an investor in the fund would retire and leave the workforce. The fund will gradually shift its emphasis from more aggressive investments to more conservative investments based on its respective target date. The performance of an investment in a target-date fund is not guaranteed at any time, including on or after the target date. Diversification does not assure a profit or protect against loss in declining markets, and diversification cannot guarantee that any objective or goal will be achieved. Exchange-traded funds (ETFs) are subject to market volatility, including the risks of their underlying investments. They are not individually redeemable from the fund and are bought and sold at the current market price, which may be above or below their net asset value.
