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Navigating the Retirement Risk Zone: Tips for Saving During Crucial Years

Are you approaching retirement or already in the early stages of this exciting phase of life? The years just before and after retirement mark a critical period that requires careful planning and consideration. We believe this “retirement risk zone” is a period of transition that necessitates comprehensive planning encompassing monetary and non-monetary considerations. Here are a few key pieces of advice we recommend to help navigate this crucial time.

Know Who You’ll be in Retirement

Retirement planning is about more than figuring out the numbers. It is important to know how you plan to spend your time. Some individuals underestimate the significance of having a plan for post-retirement activities. Some may find themselves adrift without a clear sense of purpose and engagement, filling their newfound free time with costly hobbies or activities. For example, taking up golf might seem like a fun hobby until you factor in the cost of lessons, equipment, and a membership to a club. It’s important to consider how you might like to occupy your time before you hit this major milestone so you don’t fall back on expensive endeavors.

Appreciate the Importance of Retirement Planning

In our view, the retirement risk zone, spanning the five years leading into and after retirement, is a pivotal period that demands attention. As you plan to exit the workforce, assessing your risk profile and recognizing that life is about to change significantly is essential. Your regular paycheck will become a thing of the past, and your investments take on a new level of importance.

During this time, your investments transform from abstract numbers on a statement into a real-life risk management game. This shift in perspective can be challenging, especially if you haven’t had to manage your finances in this way during your working years. It can underscore the need for meticulous planning.

The Question to Ask Your Advisor

When you’re entering or about to leave the retirement risk zone, we recommend asking your advisor one essential question:

Can my investments support the spending habits I desire in retirement? To answer this, you must firmly grasp your cost of living and anticipated retirement expenses. Some people overlook these critical details. Seek clarity on whether your inflows can support the outflows you envision for your retirement years. Don’t hesitate to ask your advisor to provide you with a concrete plan illustrating how this will work.

As certified retirement advisors, we guide individuals through this pivotal stage, and help empower them to make informed choices about their retirement. Retirement represents one of life’s most significant milestones, and we believe it’s essential to approach it with a well-thought-out game plan. 

If you’d like to discuss your retirement plans or have questions about navigating the retirement risk zone, please don’t hesitate to reach out to us. We’re want to help you make the most of this exciting chapter in your life.