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January 28th, 2009
Everywhere you go the black cloud of the economy hangs over you like a constant drizzle telling you to crawl into a fox hole and don’t spend any money. Being of retirement age, this strikes home because we have worked hard all our lives. Now we’re working even harder and earning less.If we can’t retire, what are we going to do? My situation is a little different because I have consistently flunked retirement. I still relate to the issue since as a CPA advisor, I share everyone’s pain. People want answers and I’m frequently asked to provide them. These are tough answers because each situation is different.
One of the tough choices is with people who retired thinking their savings would carry them through their golden years. The first thing all retirees need to do is recalculate their budget and compare their current expenditure level to their retirement income. Most people took a hit on their investment portfolios and need assistance on how to invest the remainder. Most retirees should cut back on the fat and downsize where possible. There are a number of things that can be done to cut back on expenses. I’ll touch on some of these ideas in a future post. The key here is to match your retirement expenses to your retirement revenue as closely as possible.
Where can retirees get good unbiased advice? More CPAs will be shifting their focus to providing some level of financial advice. This is a good place to turn for people who have smaller portfolios. You should be looking for good practical advice on how to plan and budget for the future. It could be money well spent.
If you have a shortage of future revenue, you might want to explore getting a part-time job to narrow the difference. I realize this is neither why you retired nor what you had in mind when you retired. My advice is to deal with the world the way it is and not the way you wished it was. We all have to do what we have to do. One idea for part-time work is to link work with a hobby so it is more fun.
The person contemplating retirement also has tough choices. One of the main questions to ask is how long do I continue to work? I always try to have people develop a retirement strategy to gain a sense of what they want to do and where do they want to live during retirement. Based on personal experience, living in a retirement community can make it difficult for retirees to find acceptable work since there are a lot of people competing for a limited number of jobs. This is where developing a careful and thorough strategic plan for retirement really can make a difference.
When my wife and I considered moving to Montrose, Colorado as our last move, I developed a strategic plan similar to what I would do for a business client. We evaluated the pros and cons in addition to developing a SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis of how we were going to spend our retirement years. This removed the guess work from our decision process. We rented for a year until our house in North Carolina sold. I have seen a number of people saddled with two homes because they failed to think through all of the available options. Another mistake is buying a house prior to living in a community for a period of time. After they realized it wasn’t for them they were stuck with a house they couldn’t sell.
Retirement involves lots of choices and many difficult decisions. I will regularly include blog posts dealing with many of these issues. I welcome comments and questions. Since I have experienced many of these same challenges, I think I can help.