How a Simple Mindset Change Can Make Retirement More Enjoyable

Aaron Cirksena is the founder and CEO of MDRN Capital.

For much of your career, retirement planning is about accumulation. You work to build a portfolio large enough to support a comfortable future, while trying to invest prudently, reduce taxes, protect your assets and navigate market swings.

Once retirement arrives, though, the focus changes. The goal is no longer asset growth but dependable income. You want steady cash flow that can support your lifestyle and help you meet your goals.

Many people nearing retirement believe they are ready based on their 401(k) balance, yet they still hesitate to take withdrawals. Fear can keep them from spending, whether they are worried about affording a trip or about an unexpected bill, a family issue or a health crisis.

That shift in thinking is easy to underestimate. Your paycheck may end, but your life does not. I encourage clients to begin preparing for this transition five to 10 years before they expect to retire. You may not need to change anything immediately, but you should be able to answer one question: What will the first day of retirement look like?

Adjusting How You Think About Retirement

One common mistake I see is being too cautious about spending in the early years of retirement. People often say they cannot afford to travel or enjoy certain luxuries for two decades, but they are not fully accounting for the realities of aging.

Life expectancy in the U.S. continues to rise. You may retire in your 60s and still have many years ahead of you, but your outlook at 65 to 75 will likely be different from your outlook at 75 to 85.

The first years of retirement are usually the healthiest and most active. That is the time to take the trips and spend time with grandchildren. Some people wait too long and later realize, after health problems appear, that they had the money and should have done the things they wanted to do.

It is encouraging that a Gallup poll found 82% of retirees said they had enough money to live comfortably, while only 45% of nonretirees expected the same for their own retirement.

Clarifying Your Retirement Vision

The best way I have found to ease retirement money worries is to get clear about your goals. What would an ideal retirement look like? What do you need to do? What do you want to do? And what would simply be nice to do?

It can help to think of your money in separate buckets. One bucket is for spending and covers bills, travel and other expenses. Another is for protected income, with investments designed to preserve principal and support reliable withdrawals. A third is for growth, giving you room to ride out market volatility while staying within your risk tolerance.

Choose the mix that fits your situation, and remember that retirement is yours. You do not have to leave money behind for your children or grandchildren unless that is part of your plan. That may belong in the “nice to do” category rather than the “need to do” category.

Asking the Hard Questions

No one can predict the future, and uncertainty is naturally unsettling. What if a spouse becomes ill? What if you need to help an aging parent? What if the economy weakens? Run the numbers, ask the difficult questions and think through different scenarios, but try not to get lost in endless what-ifs.

One client I worked with did everything right in preparing financially, yet on the first day of retirement he was still afraid to spend. I reminded him that he had already done the hard work. He did not need to obsess over market headlines or watch financial news constantly. He understood what each part of his portfolio was for and where his retirement income would come from.

Make sure you know how all the pieces of your retirement plan fit together. Who are you working with, such as a financial advisor, estate planner or tax accountant? What fees are you paying? What money will you have access to, and when?

A retirement portfolio balance does not tell the full story. The mindset you bring into retirement can shape how you live for the next several decades. Do not wait until the first day of retirement to decide what you want. Give yourself peace of mind by creating a longer runway than you think you need, and start having honest conversations now so you have time to make adjustments.

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