As much as we can carefully and strategically plan for our future, the reality is that once we get there, things may or may not pan out the way we thought and hoped. This is especially true when it comes to retirement planning, which is why we were curious to hear about the unexpected financial wellness lessons learned in retirement from someone who spent their career planning for retirement.
Below, Andy LaPointe, a former financial advisor who specialized in retirement planning, shares the four biggest lessons he learned in retirement—plus tips for those of us currently stashing away dollars for our golden years.
Lesson 1: Design your retirement lifestyle first
When building a retirement plan, LaPointe says that most people will set a goal number for how much money they think they will need in retirement without first thinking about how they want to enjoy in their later years. “Don’t think about the money—think about the lifestyle first,” he says. “Then create the income to support your [retirement] lifestyle.” For instance, if you plan on traveling during retirement, you’d need to factor that into how much money you’ll need to save.
Lesson 2: Start creating passive income streams
According to LaPointe, one of the best strategies for retirement planning is creating multiple passive income streams you can then use to help fund your life in retirement, so the sooner you get started with this, the better. Passive income, he explains, is money you receive that doesn’t require your time or energy to earn, such as from real estate. And, like with investing in the stock market, he adds that diversification is important for passive income streams (e.g., a mix of residential and commercial real estate properties).
Beyond real estate, there are other ways to use your skills, talents, and life experience to create passive income. Examples LaPointe shares include writing books, creating digital courses, or offering consulting services. While some passive income streams may not be as lucrative as others, when it comes to retirement planning, every little bit helps. Even a few hundred dollars per month can make a big difference in retirement.
Don’t have any passive income streams yet? LaPointe reminds us that building and creating these streams takes time, often years, so be gentle with yourself. And, he says, you can create these income streams even once you’re already retired.
Lesson 3: It takes longer to replenish an emergency fund
Even when you’re retired and enjoying your golden years, life happens, and unexpected expenses will inevitably pop up. The difference is now that you don’t have a regular paycheck coming in, it makes it more challenging to replenish your rainy day funds.
The solution: Save more than you think you’ll need in retirement. To do this, LaPointe recommends finding small ways you keep more of the money you earn for yourself, such as buying a used car versus a new one or opting for local vacations or staycations. You can then allocate the money you save towards a bigger emergency fund.
Lesson 4: Seek financial advice
“Don’t trip over dollars to save pennies,” LaPointe says about investing in a financial advisor. Often, he says, people will avoid paying for professional advice to save money, but it can cost them more in the long run. While there are a lot of online services that can offer financial advice, LaPointe says nothing beats working with someone 1:1 and ideally in person. Working with a financial advisor requires sharing many personal details about your finances and future goals, and doing so over the phone or virtually doesn’t create the same intimate relationship.
Plus, LaPointe strongly encourages interviewing the financial advisor to ensure they’re a good fit to advise you. Ask about their credentials, registrations, and financial training and experience. He even recommends going as far as asking them what their net worth is and what their investment portfolio looks like. “It’s your right to learn about the financial advisor’s intimate financial details as well,” he says, given that you’re trusting them to advise you on what to do with your money. “There’s financial information that each person should share to have a transparent relationship.”
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