Two emotions are likely to strike those who are nearing retirement — excitement and fear. Leaving the world of alarm clocks and cubicles is liberating, but feelings of apprehension about entering a new life stage can easily creep in. The responsibility of pursuing your passions and filling each week in a satisfying way can be a challenge. Then, top that off with the ever-present concern about long-term financial security in retirement.

Feeling excitement and fear is ok, but what if life after work isn’t everything you envisioned it to be?

Try A Practice Run

If you’re nearing retirement, you’ve likely taken steps to prepare financially for the future. But there’s one important thing you might not have considered adding to your pre-retirement checklist — a practice run. How you choose to spend your time (and in many cases, your money) is not always an easy decision. As we age, our interests, hobbies and relationships change. What you may consider your “ideal” retirement when you’re 55 may not fit when you’re 65. This evolution can make it hard to plan accurately for retirement.

To the extent you’ve made a financial commitment to a certain lifestyle, changing your mind in 10 or 15 years could throw a wrench in your long-term financial plan.

For example, consider an individual who has lived his entire life in New York, but retires to Florida where taxes and cost-of-living are generally lower. Deciding after several years to relocate back to New York to be near family — where cost of living and tax rates differ — can mean the dollars he’s saved will have to be re-allocated and his savings may not go as far as he’d planned.

The idea of practicing retirement may also mean leaving the 40-hour work week for something that’s more part-time. Some people may want to take a part-time role with their current employer, or work as a consultant. This also can offer important financial benefits that help preserve their nest egg.

Financial Rehearsal

Practice can also be beneficial in another way — simulating how to manage your expenses in retirement. The idea that your cash flow no longer comes from a reliable paycheck, but from other sources like Social Security and personal savings can come as a shock … even to those who are well-prepared for this change.

One idea to accomplish this is to run two accounts for a certain period of time. Through one account, manage all of your household and lifestyle expenses that you expect during retirement. This includes the costs for necessities such as food, clothing, shelter, utilities, taxes and insurance as well as “nice-to-have” items like dining out, traveling, etc.

Through the second account, manage all of your expenses that are expected to end in retirement like principal and interest on a mortgage payment (if your home will be paid off), car payments (although car payments can certainly happen again in retirement), college costs for your kids and contributions to retirement plans.

Perfecting Life In Retirement

A little practice can go a long way toward easing emotional and financial concerns when it comes to making the jump into retirement. A retirement trial run may not answer all of your questions — and it doesn’t necessarily include the unexpected events that can often throw retirement off track — but doing it for six months or so can be very beneficial in determining whether your retirement budget is realistic. Consider working with a financial advisor who can help you reach your retirement dreams.


Michael W. K. Yee, CFP
1585 Kapiolani Blvd., Suite 1100, Honolulu
808-952-1222 ext. 1240 |

Michael W K Yee, CFP®, CFS®, CRPC®, is a Financial Advisor CERTIFIED FINANCIAL PLANNER practitioner™ with Ameriprise Financial Services, Inc. in Honolulu, HI. He specializes in fee-based financial planning and asset management strategies and has been in practice for 26 years. Brokerage, investment and financial advisory services are made available through Ameriprise Financial Services, Inc. Member FINRA and SIPC. © 2014 Ameriprise Financial, Inc. All rights reserved. File # 783860