4 Retirement Financial “Whats” To Answer Before And During Retirement

| February 17, 2022

Now 12 years into my early retirement, I continually learn more about successfully funding and living my desired retirement lifestyle. One of the lessons learned is answering a few retirement financial “whats” questions. There’s a lot of both having trust in established processes and winging it when it comes to retiring. Getting most of it right before retirement is essential. But so is continuing to get it right by reevaluating the plan during retirement. This just happens to be my time of year to do just that. 

Answering Retirement Financial “Whats” Questions

I have a simple annual evaluation where I divide my plan into 4 retirement financial “whats” questions. This way I can see whether I am good for the coming year and going forward. I take this time to decide whether I can or need to make some tweaks by changing a “what” answer or two for financial and retirement lifestyle success.  

What I Need

I define what I need as the basic minimum required to fund my yearly retirement. This is everything associated with housing, utilities, health, food, taxes, insurance, transportation, and coverage for emergencies. Meeting this basic “what I need” means not having to worry about hardship, and that’s a good thing.

This retirement financial “whats” is a peek into the moment. As we have all recently experienced, the price for things yesterday is not the price today. My answer to this question 12 years ago is vastly different than it is today. When deciding to retire, we have to know our cost of living number and make inflationary estimates. I used the Firecalc retirement calculator and plugged in different spending models to gauge my retirement funding success odds. I still use it in my annual evaluations as numbers constantly change, including my dwindling time left on the planet.    

What I Have

After receiving payments from a portfolio over 12 years and riding the investment markets, what I have has also changed over time. Including a shrinking time frame before receiving my Social Security and going on Medicare. 

Like most people, I focused on hitting “the number” before retiring. This again is nothing but a peek into the moment with some projections. As the future reality is revealed, it requires annual reevaluation. 

What I have has changed much over my years of retirement. The things I look for: 

  • Is it/will it keep up with my other retirement financial “whats”? 
  • Are there risks I need to address? 
  • Is it time to rebalance assets? 
  • Am I taking too much or too little from the portfolio for spending or efficient tax management?
  • Have my other “whats” answers changed over time requiring a change here too?

What I Want

This is the retirement financial “whats” area where I play. It’s the place that makes life an adventure and fun. Much of it has a cost association that needs factored in. I’ve found it has changed drastically over the years of retirement as I’ve changed. My travel, entertainment, hobbies, interests and passions have evolved over time, accomplishments, and my aging. 

When I first retired, I was willing to do anything to ditch the rat race. Although a scorched earth lifestyle wasn’t required, I was up to it. I admit that after years of frugal living to become a good saver to retire early, I was a lousy retirement spender. That is something I’ve had to constantly work on. 

Now 12 years into retirement, I’m starting to feel my aging and mortality. There are some now-or-never “what I want” items entering into my lifestyle. We certainly don’t want to have unnecessary regrets about things done or not done. Going through the retirement financial “whats” exercise lets us know whether we reasonably can or should indulge in any unfulfilled wants before we can’t. 

What I Don’t Know or Won’t Know For A While

Before retiring there are a lot of assumptions to make. From cost of living to what our preferred retirement lifestyle will be. We only have what we know at the time. But there needs to be a little fortune telling added to the plan. 

Financially there has to be a healthy reliance on historical statistics, something a good retirement calculator will provide. But we also need an honest self evaluation of our health and longevity. We can weigh our lifestyle choices,current health, and family longevity history to understand a possible future. 

I admit that my wife and I have experienced some health issues that in no way came into our pre-retirement planning. Now known, it is placed into future planning.  It’s a best guess to how many productive trips around the sun we have left. 

Not only do we need to understand how long we will live to plan for a portfolio that is around as long as we are, but how long we will be able to do the things we want to do. All of which have both financial and lifestyle considerations. 

There’s a lot to figure out when deciding it’s time to retire and continue to evaluate throughout the years in retirement.

It goes beyond just the big picture portfolio numbers. There’s how to structure assets for income and investment allocation within our risk tolerance. On top of that there’s the non-financial aspects regarding our preferred retirement lifestyle that will fit within our budget. As time goes on in retirement, we should expect that our desired lifestyle will be challenged and change as we age. Making sure we get our “whats” answers aligned as close as possible ensures a happy and successful retirement. 

This article originally appeared at Leisure Freak.

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Category: Personal Finance

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Leisure Freak is a site dedicated to those who are truly passionate about reaching financial independence and early retirement. Not just the traditional definition of retirement, but a new passion-driven retirement.

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