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Seeds of Inspiration #4: Plan Your Retirement Like It’s the Most Important Vacation of Your Life

05/03/2021

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Plan Your Retirement Like It’s the Most Important Vacation of Your Life

By Lars Olson, CFP®, ChSNC™, CPFA, CAP®, CRPS®
President, Wealth Advisor
Alluvial Private Wealth


April 16, 2021

“If you spend more time planning for a two-week vacation than you do planning for 20 or more years of retirement, it’s time to plan differently.”


My eyesight is terrible, I’m very nearsighted. Without my contact lenses, I couldn’t see far enough ahead to drive a car and arrive safely at my destination. Unfortunately, many investors are nearsighted as well. They place more importance on the short term rather the long term. It’s understandable because we can often see clearly whatever is immediately in front of us – whether it’s a big purchase or a summer vacation. On the other hand, the long-term goal of retirement may seem so far off in the distant future, that it’s hard to even imagine it.

Traditional financial planning involves asking questions about retirement expenses which many young and middle-aged people simply can’t answer. How can a 40- or 50-year-old know how much money they’d like to spend in retirement when they don’t know where they will live or what they will do 20 or 30 years in the future? It’s a guess at best, and possibly even a wild guess.

At Alluvial Private Wealth, we want to help our clients better envision their future retirement, so we created sample retirement profiles that illustrate a variety of desired lifestyles. For example:

·       Aaron & Amy Arizona are a couple who have sold their home in Ohio and permanently relocated to Arizona to enjoy golf and the warm weather. They live in a lovely single-family home in a subdivision. They have a sizeable travel budget. And they gift money each year to their grandkids’ college fund.

·       Sam & Sally Snowbird have kept their Ohio home but also have a modest condo in Florida for four months of the year. Because they travel back and forth between their homes, Sam and Sally don’t feel a need for a large additional travel budget.

·       Molly & Mike Marion stayed in Marion after retirement. They live in the same nice home where they raised their kids. They enjoy golfing, eating out occasionally and going on a couple of trips each year. They enjoy themselves, but their lifestyle is by no means extravagant.

Using these profiles, an Alluvial client simply tells us which lifestyle they would prefer in retirement and when they expect to begin their retirement life. We’ve already estimated the expected costs for these lifestyle options as a basis to help our clients better understand what they need to save and how they need to invest in order to be in a position to enjoy their chosen retirement lifestyle.

Just as contact lenses can correct nearsightedness, better financial planning can correct financial nearsightedness. And that’s a critical action to take, because – like our driving – we need our planning, savings, and investments to help us arrive safely at our future destination.

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