The transition from growth to retirement income

Shifting the mental and financial gears for retirement

Retirement. It’s that glimmering prize on the horizon that so many of us dream of, work hard for and save.

You would think after literally years upon years of diligent planning and savings, it would be easy for most folks to kick back and enjoy the newfound freedom and realities of retirement. But the truth is, it’s not always that easy.

Instead many people are troubled with questions, including:

• Will I outlive my money?

• When should I start taking Social Security?

• And, in particular, do I dare beginning drawing down the money I worked so hard to save?

For many, the notion of dipping into that carefully amassed financial reserve is tantamount to a sin. I’m not sure if folks have a hard time accepting the fact they’ve actually reached retirement age or if they’re simply hesitant to cut the first slice off the beautiful pile of money they’ve built, but either way a serious mental shift is in order.

One of the most effective ways I’ve found to help people transition from the “building my retirement savings” phase of life to the “living off my retirement savings” phase is to create a plan.

To begin with you need to determine how much money you actually have in terms of savings and other investments; what income you might still have coming in from interest, investments, social security and other sources; and what is the expected growth rate of your savings and investments.

Next you need to evaluate your expenses and determine how much money you need to live on a monthly basis.

With those numbers in hand, you can figure out a practical balance for tapping into your retirement savings. Depending upon how you like to manage your money, you can draw down as needed or you can set up monthly or quarterly transfers to your checking account to live off of much like those once-familiar paychecks.

Like any financial planning, your retirement living plan needs to be tracked and monitored regularly to take advantage of both up- and downturns in the market and to adjust for any changes in your personal situation and other expenses (e.g. a dream vacation or a fishing boat).

While successful retirement living takes a bit of planning and effort, it’s not nearly as difficult as saving for retirement. Plus, you’ve got a whole lot more time to do it.