Simply Money

Simply Money

Each weeknight at 6pm, Simply Money makes money simple for you. Join hosts Amy Wagner and Steve Sprovach as they share easy-to-understand and...Full Bio


Surprising "Year One" Retirement Trends

Most of our clients can probably remember why and when they first called us.

That’s because, even though we recommend you begin working with an advisor 3-5 years before you retire, there are some key moments in life, things many people go through or experience, when a person is most likely to contact an advisor for the first time.

Some of these reasons are:

  • They’ve reached a savings milestone
  • They’ve set a goal to retire by a certain date
  • Their spouse or partner became ill
  • They’ve inherited money
  • Their employer offered them a pension buyout
  • They’re ready to let someone else do the worrying (about their finances)

But besides these milestones—where either urgency or forward thinking (or a combination of the two) are the inspiration—there’s another, perhaps surprising moment in life that prompts people to call us for the first time:The one-year anniversary of their retirement.

So, what’s unique about a one-year retirement anniversary?

Here are 3 occurrences that inspire people

They’re not earning enough income.

Remember, retired people are …already retired. So in this scenario, when it comes to their finances and saving, this type of person has usually done a whole bunch of things the right way.

  • They’ve saved
  • Maybe they own their house
  • They’ve hopefully developed a healthy allergy to debt

Excellent happenings all around!

But at the one-year mark of retirement, a lot of people call us with the exact same concern: There’s much less money coming in than going out, and their nest egg is getting smaller by the day.

Here’s why.

A lot of really smart people still retire with the antiquated notion that it’s strictly about achieving a certain savings amount, and making it last.   

They had a financial goal, and once they met it, they stopped working. Simple.

Then, after a year, they sat down and calculated what they brought in, what they spent, and then they multiplied it out by say 10 or 20 years.

Sometimes, they feel compelled to call within the hour.

Of course the amount you’ve saved is important. But this isn’t your parents’ retirement.

Today’s retirees need to invest wisely and proactively so that their money continues to generate a level of income that keeps their savings depletion to an absolute minimum. And in the ideal scenario? You save enough over your career, and you invest and protect it in such a way, that you are able to live off the income.

They have no budget.

We receive a lot of one-year retirement anniversary calls from people hit with sticker shock.

While some costs (clothing, for one) typically decline once you stop working, other expenses such as travel, health emergencies, and the pursuit of hobbies, will likely accelerate.

The decision to work with a credentialed, fiduciary advisor who acts as an impartial sounding board can help you identify and correct unsustainable spending habits and develop reasonable budgets almost no matter where you are in the retirement preparation and transition process.

They want help drafting a meaningful Social Security strategy.

It’s not atypical for a person (or couple) a full year into retirement to have absolutely no idea when they should apply for Social Security. The good news is, that if you haven’t applied, we can work with you to figure out a strategy that’s best for you.

You may have heard that if you’ve saved well (and don’t need the income to cover your day-to-day expenses), you should simply wait until age 70 so that you can receive the maximum benefit amount.

But the future of Social Security is far from certain.

It was just announced that for the first time since 1982,and a full three-years earlier than was projected just one year ago[1], that the Social Security Administration is going to be forced to dip into its trust fund to cover beneficiary payouts.

If you’ve saved well, the future of your Social Security is anything but guaranteed. Simply, changes to the program may well be coming.

Under certain circumstances, we might recommend that someone who has accumulated ample assets apply as early as possible rather than wait for a larger payout.

It all depends.

And for those people who are truly ready to apply today? There are couple’s strategies and tax considerations that even the most financially savvy retirees find confusing.

Remember, developing an informed approach is important because when it comes to Social Security, there are absolutely no second chances.

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