Many baby boomers envision a luxurious retirement on the beach, but retiring may be frightening for many.
Imagine a bright, golden vista filled with soothing, warm sunshine – perhaps it is California’s Highway 29. You’re driving this scenic route after crossing the Golden Gate Bridge on a Tuesday during working hours. That’s right, you’re going to Napa.
Of course, this is precisely the kind of thing you’re getting used to doing on Tuesdays — not only because you’re becoming a wine connoisseur, but also because Tuesdays no longer belong to hours under the glare of fluorescent lights in front of your work computer. Aah, you’re retired.
“That’s the dream, and as a native San Franciscan I know it well. I myself have traveled the byways of food and wine in the Bay Area. More Americans could be living their dream during retirement, wherever they go to play,” said Stephen F. Lovell, a nationally recognized retirement expert who emphasizes a comprehensive approach for well-being during one’s golden years.
“Many baby boomers will retire in the next few years, and for many of them that dream has a nightmarish tinge—they’re worried they’ll run out of money.”
Lovell, president of Lovell Wealth Legacy, said 2015 can and should be the start of that good life. He offers three simple ways to bring your dream into reality.
Revise your budget at the year’s beginning. Ask yourself: How do I spend my money? Many of us believe we have a reasonable idea of where we put our money, but unless you account for your spending, you may miss out by not putting away enough for your happy retirement.
A household’s discretionary spending on nonessential goods and services like a second smart phone case or the premier movie channel is could top 30 percent. And that is often twice what you intended, but you don’t see it until you budget.
“Budgeting puts you in the driver’s seat,” Lovell said. “From there you can control where you spend. You’re buying on purpose, and sometimes you get a nice surprise. That alluring vacation is now within reach.”
Be proactive about your financial interests before visiting a professional. Knowing which financial products may work best for your personal needs and how to protect your hard-earned money from unnecessary taxation is not what most laypeople excel at. That job is best handled by working with a professional. But, as with your health, you reap the benefits of being aware of your needs and of initiating the process of looking after yourself.
“Remember, 40 percent of retirees underestimate their life expectancy, according to an Ernst & Young study,” Lovell said, “so if you don’t want to run out of money, create your financial plan to cover this extended retirement period.”
Consider alternatives to stocks, bonds and cash. Many new investment types have appeared to solve planning and retirement issues. Yet most investors limit their choices by relying exclusively on stocks, bonds and cash. From 2000 to 2013, the stock market, for all its ups and downs, wound up at roughly the same place, around 1527. At a 2 to 3 percent investment cost per year, many investors, for all their efforts, lost money!
“I educate my clients by bringing to their attention the wide universe of investment types. Results are that more suitable solutions are uncovered and then applied for the client’s benefit,” he said.