Business
If you’re planning for retirement right now, chances are you’ve never actually been through it. In fact, most financial advisors have never even experienced retirement. In this interview, you will learn how to prepare for retirement both mentally and financially.Benjamin Brandt, Founder and President of Capital City Wealth Management, teaches people how to retire. During his time as a fee-only financial planner, he’s observed that many people are disillusioned with how they will spend their time in retirement.In this video, Greg and Benjamin discuss the importance of having awareness about what retirement will look like and then having something to retire to.KEY TOPICS -What is a Retirement Rehearsal? -What is a Practice Retirement? -What is your Retirement Calling?WHY CONSIDER A RETIREMENT REHEARSAL?There is an intangibility about what retirement might look like. Many people think retirement is trips to Disney World with the grandkids, traveling around in an RV, and rounds of golf everyday, when in reality many retirees struggle to fill the 40 hour void left by the absence of a full-time job. Statistics show 52.4 billion dollars of unused vacation time is squandered every year—a 40 year high. While a few employers gift retirees vacation pay as they leave the workforce, it typically amounts to less than a fifth of the vacation pay that was actually earned. Wouldn’t it be helpful if we took advantage of this resource and used it to help us plan for retirement ahead of time? WHAT IS A RETIREMENT REHEARSAL? The first step is to make sure you have a written financial plan. The retirement rehearsal is useless if you can’t go back to a written plan and make the necessary adjustments. The retirement rehearsal is meant to give us a little dose of reality. Typically 2-5 years before retirement, Benjamin encourages his clients to use a few weeks of that valuable yet often underused vacation time to see what life after the 9-5 grind looks like. He encourages clients to stay at home and do absolutely nothing. You’ll see how your expenses during that time coincide with the amount your written financial plan has allotted. Boredom is the number one enemy of retirement, usually inciting an unplanned vacation or unnecessarily large purchase. Such an impulse move can drastically throw off your retirement plan. As Benjamin puts it, “you’re stealing from your 70, 80, and 90-year-old self.” Consider a retirement rehearsal so that you’ll head into retirement with a disciplined, prepared mindset about what the final phase of life looks like. WHAT IS A PRACTICE RETIREMENT? Many people conduct a retirement rehearsal and realize they’re not quite ready to fully retire yet. A “Practice Retirement” is phasing yourself out of your career in increments. A combination of retirement and career, either max out your vacation days or drop down to part-time work. You’ll begin to live like you’re retired, while still making contributions to your retirement accounts and allowing your portfolio to grow. WHAT IS YOUR RETIREMENT CALLING? Benjamin encourages his clients to create a lifestyle they do not want to retire from. If you have not already, figure out what you’re truly passionate about and begin to transition from your career to your calling. Often this is an excellent way to add an additional stream of income. Even though it might be minimal, it can do wonders to the size and longevity of your portfolio. If you’re passionate about playing guitar, consider teaching guitar lessons at a local music store. If you enjoy playing golf, consider giving lessons at the country club. Even if it’s just a few thousand dollars a year, when you take the phenomena of compound interest into account, this additional stream of income from pursuing your passion can either allow you to retire a little sooner or perhaps live a more opulent lifestyle throughout the next phase of your life. Retirement is full of unknowns, so do what you can in advance to prepare. A “Retirement Rehearsal” might be a good way to get a taste of what life will be like once you no longer work full-time. Once you conduct a retirement rehearsal, consider a “Practice Retirement” to help you phase into that next chapter of life. Finally, consider using your passions to create additional streams of income that will then add even more substance to your portfolio.