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3 Things to Consider Before You Retire Thumbnail

3 Things to Consider Before You Retire

Doug Garrison, CFP, MBA - Senior Wealth Advisor



In the best of times, deciding when to retire is a tough decision.

Consider today: COVID-19; a stock market that seems eerily disengaged from reality; an economy on shaky grounds; record unemployment; layoffs and rumors of layoffs; and political uncertainty as we near November elections. What's a guy or gal to do? Is it wise to consider retiring now?

In the best of times, deciding when to retire is a tough decision.


Our intention here is not to convince you to keep working or to ease you out of the office. Instead, push yourself to consider the decision from three perspectives. Make an informed decision about what's best for you. Don't simply avoid thinking about it, and keep floating through life like debris from a storm surge, carried along as the current dictates. And to the extent possible, don't let today's circumstances drive a decision that may have implications for you over the next 20, 30, or even 40 years.

Financial Perspective

Interest rates for lump sum pension settlements are at record lows. The stock market has recovered most of the paper losses of the first half of the year. It's tempting to add up the numbers and conclude that you've acquired "enough."

Consider the impact of continued employment versus retirement.

A financial plan can help quantify how well your resources will support achieving your goals throughout retirement.


Continuing to work implies continued salary and benefits, which likely means you're going to continue to save for your retirement by contributing to your 401(k). You may continue to receive stock options or restricted stock. You'll get employee rates on health insurance. You won't forfeit your ability to use NUA tax treatment on low-cost employer stock when you finally do hang it up. You'll postpone the start of relying on your savings for your upkeep and welfare. But you will still have employment-related expenses like commuting and work clothes and employment taxes of Social Security and Medicare. Your family budget might change in retirement—additional travel or hobbies, for example, or that eventual trip to Disney World with the grandkids that you haven't had time for while at work.

A financial plan can help quantify how well your resources will support your goals throughout retirement. You'll get a better sense how likely it is that you'll run out of breath before you run out of money. If you're inclined to believe retirement is primarily a financial decision, take the time to consider both immediate and longer-term economic consequences.

Personal Perspective

Leaving employment impacts three aspects of who you are.

First, how do you feel about stopping the work you've devoted long hours to over many years? Have you accomplished what you wanted to, have you left the legacy you intended, will your successor carry on well, or will those left behind view you as deserting a sinking ship? Can you leave it all behind, or are there things you want to accomplish before you go? Has the work itself become less engaging or challenging? Are you doing work you don't want to do?

Second, how does your spouse (or significant other) view the prospects of spending more time with you--perhaps much more time--than in the past? Is your spouse looking forward to doing things with you? Or is he or she dreading having you foot-loose at home, interfering in his or her routine? I continue to work in part because my dear wife told me long ago, "I married you for better or for worse, but not for lunch."

Upon retirement, you may feel that you've gone from "Who's Who" to "Who's He?"


Finally, before you walk away from your job, consider the impact of retirement on yourself. To what extent are you ready to give up the status, the reputation, and the influence you have at work? Are you prepared to create a new identity for yourself? Upon retirement, you may feel that you've gone from "Who's Who" to "Who's He?" Are you prepared now for the shift that will eventually happen?

Plans for the Future

If you're in good health and anticipate a typical retirement of some 25 to 35 years, you need to think through a game plan for this next chapter. What are you going to do? Does the prospect of freedom to set your own agenda excite you or make you apprehensive? Have you begun the process of establishing contacts for what will occupy part of your time after retirement, or are you going to be starting from scratch? There are countless opportunities for healthy retirees, ranging from the golf course to volunteer activities to continuing education to travel and more. Our recommendation is to have thought through at least a few of these before actually setting off on your new life.

Because deciding to retire is so important and impactful, it's not uncommon to seek out an objective factor, like the lump sum interest rate or the balance in your 401(k), to help make up your mind. It's a tough decision. We believe those factors are important once you've made up your mind to retire—they can help you decide on specific timing. But we'd caution those contemplating retirement to consider non-financial factors as well. It's an important decision—make it a well-informed one.

We work both with individuals approaching retirement as well as those in it, and are happy to share what we've learned over the years. We can help quantify the financial aspects, and listen and prod as appropriate as you contemplate the personal aspects and consider future plans. Give us a call. Make an informed decision.

Let's Talk

Disclaimer: The information provided here is general and intended as educational in nature. It is not intended nor should it be considered as tax, accounting, or legal advice. Investec Wealth Strategies and its advisors do not provide tax, accounting, or legal advice. We recommend you seek the counsel of your attorney, accountant or other qualified tax advisor concerning your situation.