For lovers of classical music, there is nothing like the sound of a great symphony orchestra. It’s amazing to see a finely tuned group of musicians bring together the many different tools of their craft, including brass, woodwinds, strings and percussion, for the purpose of creating music that moves and inspires. Playing each instrument on its own may be nice, but, when brought together to work in concert with each other, the sounds can be amazing!
You can make YOUR retirement AMAZING by thinking about your plan in the exact same way. Over the years, you may have created your wealth by being a diligent saver and deferring many of life’s pleasures. You may have accomplished this by using a wide array of investment and insurance tools, such as company 401(k)s, IRAs, brokerage accounts, real estate, life insurance, annuities, CDs, etc. Over time, you probably watched your net worth grow as the values of these tools individually each increased. However, as you prepare to cross that bridge into the retirement phase of life, you will be left to figure out how each of these “financial instruments” should be played together, to create your own “Retirement Symphony.”
Here are three steps I encourage you to take to get your concert started:
1. Get in tune with a ‘Retirement Mindset’
This can be one of the most important foundational things you can do as you prepare for this journey. Understand that if you created significant wealth throughout your career, you probably did so with an “Accumulation” mindset, focusing the majority of your efforts on being a regular saver and strategic investor using a wide array of tools and products.
When you cross that bridge into retirement, however, your mindset should change from one of “Accumulation” to one focused more on the “Preservation and Distribution” of that wealth. Investment growth is still a part of the equation, given that retirement could last over 30 years. However, you should expand your thoughts beyond just investment strategies to thoughts about strategies to address a combination of things, such as:
- Creating monthly income.
- Preserving wealth that can last your lifetime.
- Preparing for the high costs of care as you age.
- Customizing your legacy.
- And preparing for the possibility of higher tax rates in the future.
2. Get to know your ‘Instruments’
It’s important to understand the capabilities of ALL your financial instruments and how you can maximize the positive things they were designed to do. For example, ask yourself what you want from each of your investment accounts going forward. Is your goal to just get a specific rate of return each year because it looks good in traditional retirement planning simulations, OR is the growth you seek for a specific purpose? Those purposes could be for such things as immersing yourself in all your recreational “bucket list” adventures you’ve been dreaming of or just growing a portion of your wealth enough to reach your legacy goals.
What about some of the insurance tools that you own? Do you understand how to maximize the capabilities of all the various annuities and life insurance policies you purchased over the years? Some examples for using these tools may include creating a lifetime stream of monthly income or having money that can be distributed tax free. In addition, these tools could also be an unknown way to pay for the cost of long-term care or provide the opportunity to leave a significant legacy to loved ones.
Whatever your desires are, understand how to maximize your financial instruments to create those sweet sounds.
3. Work with the right ‘Conductor’
With any award-winning symphony orchestra, the right conductor will certainly be the centerpiece to bring all these sounds together. Without them, perfection cannot be achieved. The same can apply to having the right person to be the “conductor” of your retirement symphony.
If you have never worked with a financial adviser, the first thing you will need to determine is “when” and “if” you will relinquish the responsibility of your retirement plan design and oversight to someone else. For those who have grown their wealth on their own, this can be a difficult decision. However, ask yourself if you have the desire AND capacity to take on this responsibility as you get older. You may have enjoyed investing money and watching the market over the years, but are you ready to oversee the “Preservation and Distribution” phase of life?
Once you have decided to hire a financial adviser, finding the right one is next. Because the financial services industry is filled with thousands of advisers, here are a few things to consider:
- Are they a fiduciary?
- Does the adviser/firm specialize in retirement-specific planning?
- Is the relationship planning-focused or product-focused?
- How are they compensated for their services?
These are just a few of the many things to consider when determining who will be your conductor … too many to list here!
Use these steps to begin creating your own sweet music and “Retirement Symphony.”
