By Shane Cummings, CFP®, AIF®, Wealth Advisor & Director of Technology/Cybersecurity at Halbert Hargrove
It’s hard to overstate how much impact COVID-19 has had on our daily lives. Since the beginning of the crisis, many of us have seen major changes to our lifestyles. We’ve adjusted how we live, work, and manage our lives on a daily basis.
My family has been very fortunate in that we were able to pivot to working from home quickly and seamlessly, allowing us to focus on the challenge of home schooling for our daughter. And like many people, we had to become experts in home IT support.
If you’re contemplating retirement or nearing your target retirement date, going through the COVID quarantine has been in many respects a dry run for finding out how to reconfigure your free time. One possible upside of this experience is the opportunity to get a feel for what that looks like and how to plan for it. What follows are a few observations – questions you might be asking yourself now to get more clarity on what you want your life in the future to look like.
What are my essential vs. non-essential expenditures?
Many people have adjusted their expenditures while quarantining from home. Understanding what constitutes essential versus discretionary spending is a core exercise to go through when planning for your expenses in retirement. Obviously things like your mortgage, property taxes, and insurance are essential expenses that you’ll need to cover come what may.
But there are plenty of other items like travel, leisure activities, and shopping that fall into the discretionary spending category, which you have much more control over. With COVID forcing the closure of restaurants and bars in many locations, many people are cutting back on their discretionary dining expenses and finding that some of it they don’t even miss.
If you haven’t spent time digging into what your historical spending in theses areas has been, it’s worth the effort to establish some baseline budgets now. This may also help you determine what’s more important to you in terms of prioritization – do you get as much pleasure from eating out as you thought you did? Perhaps you’re learned that outdoor sports and exercise are more important, and you want to prioritize workout equipment or your golf club membership as retirement spending goals. Having a firm grasp on what is core and what is discretionary can be very helpful – especially if your spending will need to change based on your resources available during retirement.
What pursuits or passions will I pursue when I have more time? Will these add any costs to my lifestyle?
Are you planning to sink more time into hobbies that involve some expenses? Maybe you’re interested in restoring old cars, or you’re planning on some major home improvement projects when you retire. Thinking about that now will help you factor that into your retirement budget as well.
After spending so much time at home, you may have realized that you want to change your living spaces to make them more comfortable or functional. In my neighborhood, many homeowners currently have rollaway dumpsters out front to accommodate major home remodels or old fixtures being disposed of. Being quarantined can also help you focus on any travel goals you may have (and don’t forget to add them to the budget!) and where those fit into retirement.
What am I planning to do with my free time? How much structure do I like to have around my day-to-day activities?
Being at home for much longer periods is also a form of “practice” for how you anticipate spending your days when you no longer need to get up and go to work every day. Do you have hobbies that will keep you busy, or do you find yourself with lots of unstructured time? Some of us need structure to our day to keep us organized and give us a sense of purpose. Being quarantined at home has been a shock to the system for some of us in that respect.
My family had to adjust quickly to helping our daughter learn from home and arranging some of our day around her class Zoom calls. My wife and I have to swap when we jump on school calls with her and make sure she is staying on task with assignments from the teacher (which can be challenging for a six-year-old!). This has required us to get very good at keeping our calendars up to date and knowing when there are conflicts between our work and school events.
Using a shared Google Calendar for the family has become a core necessity, which helps us synchronize my work tasks with my daughter’s daily class schedule. We have also been diligently using lists and task apps on our smartphones to keep track of all our shopping needs to minimize trips out and consolidate them as much as possible. We have mostly gotten our Target drive-up orders down to a ‘T’ although sometimes the grocery store still throws us off with some unexpected order substitutions from time to time.
This does require being disciplined and not letting our home and work life blur together too much. Rather than being mostly spontaneous with what we do with our down time, we’re now planning out what we do on nights and weekends a few weeks ahead of time. This has led to a better appreciation for our ‘free time’ and how we spend it.
Right now is a great opportunity to begin exploring organizations and activities that you want to pursue once retired. Perhaps you’re interested in volunteering in your local community, participating in social clubs, or getting involved in your local church. Depending on where you live, there are probably plenty of resources online to connect you with volunteer or charitable organizations in your area. A group that I am involved with has been working hard to support some local food banks under pressure due to COVID. I haven’t been able to participate recently, but this has taught me that when I do have the time later in my life I would like to pursue more volunteer work and hopefully give back to my community.
What else can I be doing to help ensure my health and happiness in retirement?
Studies have shown that exercise and socialization are important to promoting long-term health, happiness and overall wellness, so getting these integrated into your daily routine now will give you a head start in retirement. If you’re unable to go to the gym due to COVID, this is a great time to establish some new ways of moving and getting exercise.
If groups you’re involved with can no longer meet in person, why not suggest (if you haven’t already!) getting together virtually via Zoom or Microsoft Teams? Some contact, even if virtual, is preferable to none. Many organizations are adapting quickly and adopting these tools to keep people in touch but maintain distance as needed.
If you’re interested in lifelong education, the great news is that there are lots of free or low-cost educational resources available online, whether or not you have access to in-person learning opportunities. iTunes U offers free university level courses via the web or mobile devices. You can also directly access free digital courses through esteemed institutions like Harvard and Stanford, to name a few.
Hopefully, the quarantine experience has given you unique insights into your priorities and how you truly enjoy spending your time and financial resources. Going into retirement with a clear sense of your goals should ultimately help make the experience richer and more rewarding.
How do you balance having the life you want to enjoy today with what you’re going to need in the future? Are you doing what it takes to enter your dream retirement? TAKE OUR QUIZ to find out.