Five Things Successful Retirees Get Right [Video]

In this video, we share five things we see successful retirees doing in their retirement planning, as well as common traps people fall into! We also cover common traps people fall into, and ways you can implement these steps for yourself! Read the transcript below.

Video Transcript

When you retire, you want to get it right — the first time!

Hi, my name is Michelle and I’m a financial advisor here at Financial Design Studio. As a financial advisor, I’ve seen a lot of business leaders retire. The ones who do it successfully, meaning who live life to the fullest and are able to live more and give more, have a few things in common. In this video, I’m gonna share what we see successful retirees doing. And also some traps that we see people fall into as well.

#1: Start Early

The first thing that we see retiring business leaders doing is that they’re starting early. So really when you start early, it gives you a lot of opportunities along the way. Let me explain this a little bit more.

For example, someone who’s just graduating from college and they’re getting that first job, they’re starting to earn income. One of the easiest things that you can do is just save a little bit every paycheck. For example, that could be $25 from every paycheck that you receive. And as your income grows, you can continue to increase the amount you’re saving. So saving can be a great thing that you can do starting early.

Another one is planning. We’ll talk about this a little bit more in another point. But just having a plan, kind of knowing what you’re saving, which is what leads me to identifying goals. One of the things that we can sometimes see that’s hard for people to do are to say what their goals are. What is it you want to be saving for? What is it that you want to use your money on?

Those are some things that you can start to do really early on in your career. But another thing is even people who are thinking about retiring, try to start planning about 10 years before retirement. You’re going to give yourself a great window of time to make sure that you can answer questions successfully. You can answer questions that say, yes, will I have enough money to retire? Can I retire when I want to? Will I be able to do the things when I want to retire? So that’s another way you can start early is even in that decision to think about retirement. Start 10 years before so you have plenty of time to make adjustments along the way.

#2: Look for Opportunities

The second thing we see successful retirees doing is looking for opportunities. Now, one of the things that’s interesting is I think it’s very natural for us to think about opportunities when we think about our career. Should I stay where I’m at? Maybe switch to a different role? Or a different company? I’m looking for opportunities to always be doing the best with my skills, experience, and knowledge that I have.

But one of the things is to look for opportunities with the company that you’re at and the benefits that you have available to you. Now some of the ways you can look for opportunities, these can be things like compensation. So for example, your employer pays you a salary, so that’s one example. You’re looking for opportunities to always earn more. This can also be in a bonus structure.

It can also be, though, with employer stock. So this can be things like restricted stock units or stock options. You’re looking for opportunities to be able to gain more in your compensation. Another thing can be with things like benefits. And these can be things that are offered to you. You’re looking at these things saying, what are the opportunities I have to earn more with what I’m doing?

Now, on the benefit side, this can be things like your 401k with a match or a contribution from your employer. This can be things like an HSA. It can also just be things like a legal plan. We all need a state planning document so that our money goes to who we want it to when we pass away or that we have someone making decisions for us when we can’t, when we’re medically unable to. A legal plan can help you get those documents you need for a lot cheaper but still get quality documents. These are just a few ideas, but you can read our article on coordinating executive compensation to learn more!

These are common ideas that you could be getting from your employer. But again, it’s looking for those opportunities. A lot of times you’ll get that benefit booklet from your employer and it’s really digging into those saying, I’m looking for the opportunities of the things I know I need to use. How can I get these a little bit cheaper because these are offered by my employer? It’s those kinds of opportunities we wanna look for as well.

Timing is another opportunity that’s really interesting. Sometimes just based on the way and the time that you do something by choosing an actual point in time to make a decision, whether that’s donating funds and you’re pairing that with when you’re going to sell a stock that has a large gain. Things like that, you’re pairing some tax saving strategies together in certain years. Timing can be points of opportunity as well.

#3: Get Help

The third thing that we see successful retirees doing is that they’re getting help. And this comes in a lot of different ways. But think about it this way. When you’re at your home, you have things that need to get done, maybe you’re busy. And so you say, I don’t have time to do this. Maybe that’s cutting your lawn.

Maybe you say, I don’t have the interest or the knowledge that I need to do this. I need to rewire something, some electrical wire in my house and don’t know how to do that safely. I need to pay someone who has that knowledge. This is how we explain to clients that this is really what they’re doing when they’re hiring us. And we’re saying, we have the time, the interest and knowledge.

This is why we need all different people. We need to get help from the people who have the time, the interest and the knowledge to be able to do something successfully because the biggest thing is that when you’re retiring, you want to get it right the first time. So all of those pieces are important.

Now one of the things I’ve seen is some people, you know, they might start out early and they’re saving and they’re doing these things early. But as they go along and they start to save and have funds invested that add up to a decent amount. So they may say, “hey, I have $500,000 of money saved.” But they decide I’m going to give 100,000 to this advisor to manage, 100,000 to another advisor to manage, 100,000 here, and they do this with five different advisors. What’s happening is they’re saying, I want to see who does the best, or I want to see my money grow. This is kind of a test. But what’s also happening in a way is you’re kind of hurting yourself because those five different advisors are not actually able to help you the best that they can.

You can structure a portfolio with stocks and bonds. One advisor could put all stocks. One could put all bonds. They may say, hey, what are the other assets that you have? So we’re balancing out the risk you have. What makes it very hard for these different advisors to do the best job for you is they aren’t seeing the whole picture. So it can be very hard to implement things when it’s broken up into pieces. What I find when I’ve seen people do this is they end up getting disappointed because they’re managing five different advisors. So that’s just something to watch out for.

One of the other great things when you’re working with an advisor or you’re just getting help from a professional is that sometimes it allows you to be accountable to someone. So when you’re accountable to someone, they’re actually able to say, great, you got these things completed. Hey, there’s still this other thing that needs done. Maybe that’s your estate planning documents. Maybe you don’t have life insurance in place. When you’re able to have someone help you, it’s actually a form of kind of being accountable.

#4: Balance Risk

The fourth thing that we see successful retirees doing is that they’re balancing risk. Now we can think that this is in a lot of different areas. So for example, with investments or things like this, a lot of times we think about risk in that sense. But we also want to think about it in just your overall plan. So think about when the market’s doing really well, you’re excited to see your account balances grow, and you just feel like if I can just keep saving, I can get a little bit more, the market keeps moving a little bit higher, a little bit more of this individual stock.

But what I also want to remind you with, especially as you get closer to retirement, is you really want to balance out the risk that you’re taking. The goal when we’re investing for our clients is that we want your money to be there when you need it. And so in order to say that, we need to be achieving and getting the growth that the market has, but also balancing out and protecting what it is that has grown.

This is really what you’re doing in your whole plan. So one thing that we’ll see people do is they say the market’s going really well, or even when they’re home, they’re thinking about selling or buying a home. We think about it with home prices as well. And they say, “the market’s really strong, I think I’ll wait another month or another year.”

But these things can change really quickly. And so if it’s part of your plan to buy or sell a home or investing along the way, these are things that we just want to be careful that we’re balancing the risk. One of the things is if you can define what is enough, if you see what’s in your plan, if you see that your plan works with what you have, you can adjust the risk. Maybe you don’t need to take all that risk. You don’t need to be getting all that growth because your plan works just fine.

If you can define what is enough and you reach for that and you reach that, then you won’t fall for maybe losing some of this money when the market does fall or when housing prices change. That can be a real disappointment when you’re reaching to get a little bit more. But ultimately what happens is the market turns over like it does. The market is volatile. All of these things change over time. And so you want to be sure that we’re balancing out the risk, taking the opportunities like we talked about, but balancing that all together along the way.

#5: Commit to a Plan

And the last thing that we see successful retirees doing is really that they are committing to a plan. Now, when we think about a plan, a lot of times and most of the time, we think about a plan that happens before the event. If you’re starting early, for example, you’re planning ahead for retirement many years in the future. If you’re someone who’s thinking about retiring, you’re thinking in 10 years out.

It’s really wise to have a plan in place. One of the things by getting a plan is you can define, this is what I want to do, this is what’s important to me, here’s what I need, here’s how much I need, here’s all of the things I want to accomplish. Now we ask the question, can you do those things? We also can answer those questions. Yes, your plan looks like it should work. All of those pieces are really valuable to you. What we see is that clients feel a huge weight off of their shoulders.

But what really gives them a peace of mind is when things change, because I have not seen any plan that has gone exactly how someone planned it. Life happens, things change, their goals change, their kids move and they want to move with them. A lot of things happen.

And so as we adjust those plans, we can say, yeah, that still looks good. Let’s just tweak this. Let’s adjust this. How are we going to pay for that now? Now that we’re using these funds for this, things like that. A plan allows you to make adjustments along the way and still feel confident because you’re clear on what’s going to happen. And so this is what people really gain when they have a plan in place. So this means when you’re getting ready to retire, this means after you retire, it’s always having that plan and being able to say, plan still works. We can still do these things that we wanted to. That’s what we hope that our clients feel is that they can rest assured that they have a plan in place and it’s playing out even as things change in their life.

Next Steps for Your Retirement Plan

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Thanks for watching!

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