Two emotions are common for those who are nearing retirement — excitement and fear. Leaving the working world behind can feel empowering; however, apprehension about entering a new life stage may also creep in. 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. Test driving aspects of your plan before you’re actually in retirement can help provide a sense of security.
What does your ideal retirement look like? Deciding how to spend your time (and your money) in retirement is not always an easy. As we age, our interests, hobbies and relationships change. What you may consider your “ideal” retirement when you’re 55 may not be the same as when you’re 65, which can make it hard to plan accurately for retirement. Consider sitting down with your spouse or family members to explore how aging and future milestones may alter your retirement. Your financial advisor can help you make a plan that aligns your ideal retirement with your financial situation.
Test drive your retirement lifestyle. Many people pledge a significant amount of savings towards a particular lifestyle in retirement — a home in another part of the country or an annual trip abroad. Problems can arise if you have made a financial commitment to a certain lifestyle but change your mind later. It’s better to understand the potential implications of altering your plan before you actually retire. For example, if your retirement plan includes a big move to a new location, you may benefit from a practice run before making the relocation permanent. Be prudent and build some flexibility into your plan to avoid unintended consequences.
Simulate your retirement expenses. The idea that your cash flow no longer comes from a reliable paycheck can come as a shock — even to those who are well prepared for this change.
One idea to accomplish a sense of financial security 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 — food, clothing, shelter, utilities, taxes and insurance — as well as “nice-to-have” items like dining out and traveling, etc. You may have to estimate or inflate your lifestyle expenses for retirement as they could rise when you have more free time.
Through the second account, manage all of your expenses that are expected to end in retirement — principal and interest on a mortgage payment (if your home will be paid off), car payments, college costs for your kids and contributions to retirement plans.
The best way to get a handle on these expenses is to experience them while you’re still working. Take that trip to Europe before retirement. If the cost is different than expected, make adjustments to your financial projections to reflect reality.
Perfecting life in retirement. A little practice can help ease emotional and financial concerns when making the jump into retirement. Consider working with a financial advisor who can help you determine a budget and a retirement income plan that fits your needs and desires.
MICHAEL W. K. YEE, CFP,® CFS,® CLTC, CRPC®
1585 Kapiolani Blvd., Ste. 1100, Honolulu, HI 96814
808-952-1240 | michael.w.yee@ampf.com
ameripriseadvisors.com/michael.w.yee
Michael W. K. Yee, CFP®, CFS®, CLTC, CRPC®, is a Private Wealth Advisor with Ameriprise Financial Services, LLC. in Honolulu, Hawai‘i. He specializes in fee-based financial planning and asset management strategies and has been in practice for 41 years. Certified Financial Planner Board of Standards, Inc. (CFP Board) owns the CFP® certification mark, the CERTIFIED FINANCIAL PLANNER™ certification mark, and the CFP® certification mark (with plaque design) logo in the United States, which it authorizes use of by individuals who successfully complete CFP Board’s initial and ongoing certification requirements. Investment products are not insured by the FDIC, NCUA or any federal agency, are not deposits or obligations of, or guaranteed by any financial institution, and involve investment risks including possible loss of principal and fluctuation in value. Securities offered by Ameriprise Financial Services, LLC. Member FINRA and SIPC. ©2025 Ameriprise Financial, Inc. All rights reserved.
Leave a Reply