By Tony Delane, CFP®, AIF®, Wealth Advisor
In building retirement plans, there’s no such thing as “impervious”—but with care and discipline, you may come pretty darn close.
When we create and update financial plans for our clients, we’ll dedicate many hours to gathering inputs, detailing spending changes over time, and thoughtfully including as many “what-ifs” as possible. Over the years, we’ve identified ways in which even the best-laid retirement plans can fall apart.
Here are three key ways your financial plan for retirement could unravel and ideas on ways to help prevent this.
1. Boredom in Retirement
Retirement is often envisioned as a time of relaxation and leisure, but the reality may be quite different. Many retirees find themselves with an abundance of free time and not enough activities to fill it. This can be compounded if many of your friends are still working and on different retirement paths. For some who are challenged with a liberated calendar, the answer is returning to the workplace.
Instead, why not envision your dream retirement life today? It’s essential to plan for how you will spend your time in retirement. Consider developing hobbies, volunteering, or even taking up part-time work in a field you’re passionate about. Engaging in social activities and staying physically active can also help maintain a sense of purpose and fulfillment. For example, joining a local club or taking classes can provide both mental stimulation and social interaction. These ideas can be implemented in the years leading up to retirement to help you prepare ahead of time.
2. Not Planning for Deferred Maintenance on Your Home
One of the most overlooked aspects of retirement planning is the potential for unexpected home maintenance costs. Without a steady cash flow, a significant expense like a roof replacement or a major appliance breakdown can confound the best-laid plans.
Here’s an example: Imagine you retire and a few months later, your home’s roof starts leaking. The cost to replace it could be significant. Without proper planning, this expense may force you to dip into funds meant for daily living expenses.
One way to help mitigate this risk is to create a home maintenance fund as part of your retirement plan. You can regularly set aside money for potential repairs and maintenance. Additionally, it’s a good idea to consider conducting a thorough inspection of your home before retiring to address any immediate issues. It’s much easier to budget for these unexpected costs before you commit to live on a fixed income.
3. Not Preparing to Age in Place in Your Home
As we age, our mobility and health needs change. If you plan to stay in your home during retirement, it’s important to ensure that it’s equipped to accommodate these changes. Homes with multiple stories, steep driveways, or difficult access to medical care can become challenging to navigate as you get older. In addition, home maintenance can become more of a burden as we age.
For example, a two-story home might become impractical if climbing stairs becomes difficult. Or a home located far from medical facilities can pose a risk if your medical needs change and you require frequent medical attention.
Some people make modifications to their home to improve accessibility, including installing stair lifts and ramps. Others relocate to a single-story home or a condo; still others choose the predictability of a retirement community with fixed expenses. You should also consider the proximity of your home to your network of family and friends— and medical facilities. And how about the availability of public and private transportation services before you need them?
Planning for potential changes in your health and lifestyle can help ensure that your home remains a safe and comfortable place to live as you age. Or if that’s not practicable, you should include the expenses of a future move in your current planning.
Thinking through the entire tapestry of your life in retirement planning
While financial planning for retirement is essential, it’s equally important to cast a wider planning net. By looking deeply at the what-ifs surrounding your living situation, you can avoid potential pitfalls and be prepared as best you can for life’s unanticipated difficulties. Similarly, by considering how to best pursue your passions post-work, you can set yourself up to relish all those extra hours.
These kinds of planning elements may help your retirement plan be more comprehensive and resilient—and offer you peace of mind.
Disclosure:
Halbert Hargrove Global Advisors, LLC (“HH”) is an SEC registered investment adviser with its principal place of business in Long Beach, California. HH may only transact business in those states in which it is registered, notice filed, or qualifies for an exemption or exclusion from registration or notice filing requirements. Registration does not imply a certain level of skill or training. For information pertaining to the registration status of HH, please contact HH or refer to the Investment Adviser Public Disclosure web site (www.adviserinfo.sec.gov). Additional information about HH, including our registration status, fees, and services can be found at www.halberthargrove.com.
This blog is provided for general information purposes only. No portion of the content serves as the receipt of, or as a substitute for, personalized investment advice from HH or any other investment professional of your choosing. It should not be construed as a solicitation to offer personal securities transactions or provide personalized investment advice. The information provided does not constitute any legal, tax or accounting advice. We recommend that you seek the advice of a qualified attorney and accountant. All opinions or views reflect the judgment of the author as of the publication date and are subject to change without notice. All information presented herein is considered to be accurate at the time of writing, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted.
