Retirement Spending Plans

By Melissa Tosetti

Do you offer clients nearing the end of their careers a Retirement Spending Plan?

For most clients going into retirement, it will be the first time in their lives that they have both time and money.  You may have already had the experience of having a client who, in that first year wanted to do everything including buying the RV, remodeling the kitchen and traveling across Europe for three months.  While they may be able to do all that over time, doing it in the first year completely decimates the financial plan you’ve worked so hard on for them.

In the article The Most Important Thing You Need to Do Before You Retire, According to Financial Advisors, Alix Langone tells his retiring readers:

The biggest worry for people approaching retirement is, financial advisors say: “Will I have enough? Where’s my cash flow coming from?” But if you actually map out your spending ahead of time, you’ll know the answer (at least for the short term), and you’ll enjoy greater peace of mind when you stop working.

Over the last two years, we’ve worked with more and more of this demographic and they are some of our favorite clients.  They’ve worked so hard and for so long that mapping out that first year of spending is something they truly enjoy, even if it means adjusting how they have to spend.

A Retirement Spending Plan isn’t just about backing into the numbers to figure out how much they can afford to spend. It’s about helping them define and design the lifestyle they want to live.

  • How often would they like to dine out?
  • Will they be visiting the grandchildren two states over more often?
  • How often would they like to travel internationally and domestically?
  • Will their spending on hobbies increase?

For clients that are small business owners, it can be especially challenging figuring out what their retirement spending will look like because for many, their work and personal spending can be quite tangled.  It takes time to untangle that information and define what their new spending will look like.  But that process is worth every minute.

If you don’t already, consider adding Retirement Spending Plans to your service menu.  It’s such a fun conversation to have with your client as you map out what those first one – three years look like as far as spending.

Not only is it another value add, but that meeting will go a very long way toward safeguarding the integrity of your overall financial plan.  Langone later points out in his article:

Budgeting for your anticipated annual spending will help you begin retirement with more a disciplined mindset, financial advisors say, and more importantly, it will also help you resist the urge to pull your money out of the market if stocks start to slide — a rookie mistake that financial advisors say tempts many during the kinds of markets conditions we’ve seen of late.

For many advisors, creating a Spending Plan with their clients is something they truly enjoy and are happy to carve out the time it takes.  For others, while it’s something they’d like to offer, they just don’t have the resources.  If you’re in the latter and would like to learn about how we work with financial advisors’ clients to help them create Spending Plans based on the goals they’ve outlined with their advisor as well as to adjust their spending habits contact The Savvy Life to learn how we work with advisors to create Client Spending Plans.