By T. Eric Reich
Having specialized in working with retirees for nearly 25 years, one thing I have found as a common desire for them is to have fewer moving parts in retirement. This isn’t something that retirees often ask for, but rather something that they show a strong preference for, often without even knowing it.
Retirees will talk about things like paying off their mortgage so that they “don’t have to worry about it” or buying long term care insurance so they “don’t have to worry about it.” Not having to worry about things is the ultimate goal in an enjoyable retirement.
People have to worry about a hundred different things during their lifetimes, and once they get to retirement, they want to stop worrying about as many of those things as possible. The way I like to help them with that is to have fewer moving parts. Like any product we buy, the more moving parts something has, the more likely it is for one of those parts to break.
So what are some of the things that retirees can do to have fewer moving parts in retirement in order to help make their retirement more enjoyable? For recent retirees, travel is the biggest desire I see them hoping to enjoy. Because of this desire, many want to buy a second home in a warmer location. While this can be fine for recent retirees, the older they get, the less inclined they are to want to maintain multiple properties.
They may want to scale back from 3 houses to 2 to eventually 1. For many reasons, it is often a smarter financial and practical decision to rent places each winter vs. buying them. Sometimes they feel an obligation to go to the same place every year because they already own a place there vs. traveling to a new area that they may want to visit.
Sometimes the worry and expense of a home in say Florida, for example, may keep them up at night. If I don’t visit enough, am I wasting money? What if a storm hits my place? The fewer houses you own means fewer things that can go wrong, and potentially less worry.
For many retirees, grandchildren are often another reason to not purchase a second home that is far away. Many grandparents, especially new ones, want to be close by to see their children and grandchildren as often as possible. Moving far away may prevent them from enjoying that part of their life as much as they would like.
Fewer bills are always something retirees appreciate. Paying off a mortgage (not always the best strategy) or vehicles, etc. to have as few fixed expenses as possible helps retirees to worry less. I am yet to meet a retiree that says they want more bills to worry about in retirement. Other expenses to review and potentially reduce or simplify include cable providers, cell phone carriers, insurances, credit cards, and frequent flyer programs.
Consolidating your professional advisors, such as your financial advisor, insurance advisor and/or tax advisor, can be another potential stress reliever. Having multiple advisors within the same specialty can potentially make your situation more complicated.
For example, if you have more than one financial advisor, they may not be aware the other’s portfolios, and therefore, your investments, as a whole, may not be aligned with your goals. If you are after diversification with your investments, that can easily be achieved within the portfolio itself vs. the people managing it. In addition, having multiple investments with different investment managers and different fund companies, may be costing you more money when it comes to fees.
The fewer things to worry about, the more likely you are to enjoy retirement. By eliminating as many unnecessary things from your life as possible you can spend your time focusing on those things that are most important to you and your family.
T. Eric Reich, CIMA, CFP, CLU, ChFC is president and founder of Reich Asset Management and can be reached at 609-486-5073 or firstname.lastname@example.org.