Are you 2023 retirement-ready? If you’re planning to become a retiree this year or you’re already retired, there are some things you should know. 

As an actively working financial planner, how do I know? Sure, I work to help people retire, but I’ve never done it myself. I have, however, retired alongside lots of clients over the course of my career. (Hint: The planning doesn’t stop there!) And I look forward to being there for many more! It’s been an interesting transition for nearly all of them, whether they’ve taken to this new phase of their lives ever-so-gracefully or over a few speed bumps. 

That said, let me show you how to make it a smooth one.

What Defines Retirement?

With so much talk recently of “financial independence,” retirement might seem to have lost a bit of its sparkle and shine. But I strongly disagree.

Let me be clear: When I say retirement, I’m talking about pure retirement. As in no more work. Retirement in its purest form is different from financial independence in that it’s not a “work-optional” phase. It’s a work-free phase. (Don’t get me wrong, financial independence is a beautiful thing … if you do it the right way. And I can absolutely say the same about real retirement!)

What does that mean? Maybe you have some passive income from a private business or other investments, like publicly traded stocks and bonds, or an investment property that you own. Retirement in its purest form means that you’re not actively working in any business (public or private) and earning money for doing so. And you’re not a property manager — you leave that to the property management company. You let the dollars roll in or out (depending on how you want to look at it) while you do things other than work. You did enough of that over the last few decades, anyway!

So how can you get yourself financially ready for this no-work phase if you’re not retired yet?

Begin Your Retiree Budget Now

Rather than waiting until your retirement date to flip a switch and hope that the change happens without a hitch, start today. Live your retirement budget now. Know what you can spend each month to make your hard-saved funds last … and what spending above and beyond that amount would do for your future. Then live your budget. 

For many, it’s tough to imagine life without cash flowing in. If you have a passive income stream, great! But you don’t need one to retire on. You do, however, need to work through this mindset after 40 years or so of relying on income to meet your needs. You may have Social Security coming in or even be looking forward to a pension. Don’t forget to factor those in, along with:

• Inflation … hopefully smoothing out
• Markets … hopefully recovering
• Interest rates … maybe leveling out
• Health care … and Medicare

And more!

Know Your (Ends-Oriented) Goals … And How Much They Cost

Now that you’ve got your day to day down, get a strong grasp on your goals and their costs. Goals make a financial plan go ‘round. If you stopped me on the street and asked me what is unique about financial planning, my answer would be simple: Goals.

But keep in mind that these goals should not be means-oriented. Outperforming a stock index on an annual basis is a means-oriented goal. Similarly, aspiring to own a rental property is no different than aspiring to own a mutual fund. Both are simply different types of investments, and these are examples of means-oriented goals. Achieving a means-oriented goal really doesn’t prepare you for anything (like your retirement). Your retirement goals should be about the ends.

“I want to retire with a monthly after-tax income of $5,000 that will grow with inflation.”

“When I’m retired, I want to have $10,000 per year available for travel to my bucket-list destinations.”

“I want to make sure that I am never a burden to my kids. In fact, I’d love to leave a million-dollar legacy for my family.”

These are ends-oriented goals. They’re the sort of goals that will give you a much clearer path to your retirement. Not only are they — for all intents and purposes — S.M.A.R.T. (Specific. Measurable. Attainable. Realistic. Time-oriented.) goals but they’re also specifically about how you will enjoy your means. 

Your financial plan will then serve its purpose in determining what it is that you should do with your means — i.e., your income, assets, and so on. Your means help you to achieve your ends-oriented goals.

You’ll find that your goals will most likely fall into two categories: One-time goals and periodic (typically, annual or monthly) goals. What’s unique about retirement is that, since each category of goal will have a direct impact on the other, it’s really important to contemplate these goals collectively. For example, a $50,000 kitchen remodel may impact your ability to prudently sustain a specific monthly income for the following years.

Here are some examples of goals to consider:

• One-time goals, like
  • Completing home improvements,
  • Relocating or downsizing,
  • Making a large charitable gift,
  • Writing a novel or your memoirs,
  • Finishing your genealogy project,
  • And more!

• Periodic goals, like
  • Sticking to spending (no more than) your monthly income,
  • Buying a new (or new to you) car,
  • Traveling,
  • Spending extended periods of time with your kids and grandkids,
  • Going on outings with friends,
  • Taking classes to try new things,
  • Finding a new hobby,
  • Attending your high school or college reunions,
  • Embracing the snowbird lifestyle,
  • And more!

Pass It On

If you’ll be passing a portion of your wealth along to the next generation (or generations) or to your favorite cause, be sure to include it in your plan, too. Retirement is a major life event that necessitates revisiting your will and other estate documents at the very least. It can also be the perfect time for an update if you haven’t done so in a while. And if you haven’t done any estate planning yet, why not get started now that you’ve set the nine-to-five aside? 

We recommend a thorough estate plan review every five years. So if you’re a 2023 retiree celebrating five years in, this is the nudge you’ve been waiting for. And congratulations on your retirement anniversary! 

Some things to think of estate-planning-wise are whether you have the same goals for your money. Have your relationships or affinities for charities or causes changed? Have you decided to enjoy the fruits of your labor more and to pass along less now that those you care about are on more solid financial footing?

In fact, so much can change throughout your retirement years that there are other things you should be checking in on. Depending on your plans, these include your long-term care (LTC) planning or LTC insurance and your life insurance. It’s a good idea to see if your insurance company has made any changes to your policy or policies since you last checked in, whether you’re still paying premiums or not. 

You’ll want to make sure any life and/or LTC insurance policies you own haven’t lapsed (aka ended) for any reason. And if your plans have changed drastically, it’s a great opportunity to re-evaluate whether you need insurance at all — or more of it. It’s likely to be pricier with each year that goes by, so don’t wait to check this to-do off of your list.

Then get on to all of the fun that retirement has to offer! But before you do, here’s a quick refresher on my top three tips for 2023 retirees:

1. Live like you’re retired now.
2. Know your goals.
3. And plan to pass it on, if that’s part of your plan. 

It might seem like a lot, and it’s my duty to be honest and tell you: It can be a lot. But you don’t have to navigate retirement or your shift to it all alone. You only get one chance, after all, and it’s certainly worth retiring the right way! (You truly do deserve it.) With your financial planning ensemble by your side, we’re here “retire” with you in 2023 and be here for you for years to come.