Have you ever wanted something so badly…and when you finally get it, you don’t know what to do with it? Or how to enjoy it? Or if you will even use it? What comes to mind for me is a new set of golf clubs. The new graphite shaft Callaways that sit in the garage and never gets used because I work too much to golf. I’m sure we all have had a similar experience like this, and would you believe me if I told you I often see the “thing” as being someone’s retirement nest egg?
I have had the absolute pleasure of helping 2-3 people retire every year for the past 30 years. I’ve had a front row seat at watching people pursue one of the greatest American Dream’s of an early retirement and felt joy in my job as I assist people thru the transition from working to retired. But it’s not always an easy transition. Sometimes, people misjudged their finances and didn’t quite save enough. More often, people misjudge their ability to reverse thirty years of a savings/investing mindset and don’t enjoy the process of taking withdrawals from their retirement accounts.
Sounds funny, doesn’t it? You plan and dream and dream and plan for retirement and when the day comes, you don’t have the ability to stop working because you can’t seem to take any money out of your investment accounts. I wish I was kidding. I really do. But this is a very common occurrence and deserves to be addressed. And I know I’m calling people out, but I’m also sharing this collective story that I’ve been a part of to help others understand the mindset of retirement income a bit earlier so when their day comes, they can make that pivot (and first withdrawal) with glee.
Since the dawn of 401(k) time, which started the demise of many pensions, workers have been told to “save for their future”. This concept has been hammered into everybody’s psyche for so long that reversing that trend can be hard. Mentally hard. This is usually how it goes: You were working this week, making your 401(k) contribution out of your paycheck like you have every two weeks for the past 30 years, and you now must turn around and take it out to pay your bills. And you start to think to yourself: “ I used to put in $400 every paycheck and I must now take out $4,000 per month?? This just feels wrong. It’s too much. It won’t last. I just can’t….let’s go back to work so we don’t have to take any money out.” And thus begins the famous “I’m retired but still working” job because you just can’t do it. Financially, the numbers all add up and taking income from the portfolios is fine. But mentally, some people just can’t do it.
And that is the inflection point I’m writing about today. The day you have enough money to stop working. The day you have the desire to stop working. The day you dreamed about. But your mindset cannot change in one day, thus the decision to continue working is made. Don’t get me wrong, there is a lot of benefit to downshifting into a slower paced working environment between the grind of your 30+ year career and full retirement. It gives people structure, purpose and extra income to assist with their financial stability. I just want to make sure we are making this choice to continue working for the right reasons and not because the financial scarcity mindset is in full control and enjoying the financial fruits of your labor feels like public enemy number one.
My advice to those of you who are not there yet is to get really good at finding a mental balance between savings and spending. Practice both: not just the savings part and not just the spending part. Find the sweet spot where spending is not a guilty pleasure but a utility practice of a well-balanced financial environment allowing the savings to happen naturally. If we can find that balance early, we have a better chance of continuing that mindset as we pivot into full retirement.
My advice to those of you who find themselves currently in this mindset is to get really good at the numbers. To have the mathematical proof and statistical averages on full display to try and logic yourself into this mindset that taking retirement income is okay. Take the chance, see what happens. Grab the clubs. Book a tee time. It’s time to play.
Kimberly Enders CFP® CWS® CERTIFIED FINANCIAL PLANNER™
Enders Wealth Management
38700 Van Dyke Ave, Suite 125
Sterling Heights MI 48312
www.enderswm.com
#kimenderscfp
For a comprehensive review of your personal situation, always consult with a tax or legal advisor. Neither Cetera Advisor Networks LLC nor any of its representatives may give legal or tax advice. 10% IRS penalty may apply to withdrawal prior to age 59.5