You worked, slaved, bought a house, sent kids to college, took an occasional vacation, maybe bought a few toys along the way... and retirement is here. You sit down with your Certified Financial Planner™ and go over the last of the numbers to make sure you have enough positive cash flow to pull the plug... and say ta-ta to your boss and co-workers. They throw you a party and present you with the long-awaited gold watch (yeah, right!) you've been waiting for... and home you go. All those years of meeting with your planner to get things right, alter the plan with life changes, and now it's time to reap the benefits... retirement is here. Finally, the ability to do what you want, when you want, where you want- you planned and saved all these years for this time. Fast forward 1-3 years or more-so now I ask you... are you keeping up on your planning now that you're in that sacred space, or are you just assuming it will all work and support you for all your remaining years? If you think it's going to work this way, think again.
Life is an ever-changing entity. Changes are inevitable, and will happen whether you think they will or not. Even if you did your pre-retirement planning with diligence, it is (from my experience) common to see folks stop planning once in retirement thinking they've made it, and the planning is over. This couldn't be further from the truth, with dire consequences for failure to continue. Just because you decide to retire, it does not mean that life won't change... life goes on, along with changes which may affect your financial standing dramatically. Let's look at some examples:
Let's start with our little darlings, the loves of our lives, those beacons of light called children. Statistics show, and I'm sure you see it all around you, that kids today are having a tough time getting and keeping jobs. So, no jobs, no money, and no money... which brings them, as Simon and Garfunkel would sing, "Homeward Bound." The song calls it silently golden, but for those on a fixed income, it can be devastating. Additional costs to the parents can throw quite a monkey wrench on that budget you so carefully planned, which has a snowball effect on the cash flow plan. Since we can't spend the same dollar in two or more places, the money utilized to support adult children must come from somewhere else in the budget, or from the carefully planned savings and investment accounts, slowly eroding them and as they get smaller, so does the peace of mind of having the emergency nest egg. The plan needs to be reviewed and adjusted for the additional expenses, which were unexpected for in the original plan. They call them boomerang kids- if you've ever gotten hit in the head with a returning boomerang, you know how much it hurts.
Medical expenses are the single biggest expense for our senior population. I know I swore I'd never be one of those with vials of pills lined up in my medicine chest... and guest what... it's like a rogue's line-up. Along with that comes deductibles, trips to the doctor and pharmacy (gas and time) and more money going out that I may not have accounted for doing my retirement planning (Disclosure: no, I'm not retired, plan on it anytime soon, and have had to adjust our budget for unplanned medical expenses). It's unfortunate, but the day we are born we are not stamped on our bum with an expiration date, so we must plan for the long haul and all its contingencies. With all we read about with the massive unknowns going on with the healthcare bill, we have no idea what the cost of healthcare will be for all of us. Being on Medicare is not "home-free" card: with paying for the uncovered part of Medicare as well as a Medigap policy, these out of pocket costs are subject to taking a good bite out of your monthly budget, not counting any deductibles and over the counter remedies we all need to move freely about without moaning.
Cars break down, roofs wear out, hot water tanks burst, and we all experience unplanned and unbudgeted surprises. It's important that we don't think that once we retire, we don't have to plan anymore. If anything, since our income is now fixed as opposed to adjustable by working overtime, taking a part-time job and the like, continued planning is more important than ever before. Be sure to have regular visits with your Certified Financial Planner™ and keep up on your inflows and outflows. We get enough surprises in life- running out of money due to lack of careful ongoing planning should not be one of them.
May you all have a wonderful, enjoyable and safe Summer. Don't miss a minute to revel in the warm weather, smell the flowers all around you, and smile at the wildlife you see out and about. Plan family stuff- it doesn't have to be expensive to have a blast when you're surrounded by those you love... in a flash, the leaves will be falling and we will be grumbling about the impending snowstorms!