How to Plan Your Finances with Confidence and Retire Well

Many of us are counting down the years until we reach retirement age, often saving aggressively in order to retire comfortably. While research shows that retirement can improve your health and overall life satisfaction, retiring can also have its share of pitfalls if your financial future hasn’t been carefully thought through.

Earlier this month, we spoke with certified life and business coach Sharon Smith-Swan, and asked her for a list of tips for retiring well. Many of you responded, asking us to delve deeper into financial planning for retirement (#3 in Smith-Swan’s list). Here she is again, sharing sound advice.

Jamie Lauren

Q&A with Sharon Smith-Swan

Sharon-Smith-Swan_avatar1Q: Are there specific actions those on the brink of retirement can take to improve their financial confidence, as you call it?

A: To improve your financial confidence, I recommend doing these three things:

1. Start the conversation about your finances 4 years before you plan to retire.

If you’re married, sit down with your spouse and your financial advisor. If you’re divorced, separated or widowed, meet one-on-one with your advisor. Discuss not only your picture of retirement, but your concerns as well. Ask hard questions of yourself and your advisor to determine if you have sufficient funds to retire fully or if you need to bridge your finances with an encore career or part-time work. It’s never too late to start the conversation, even if you came into retirement unexpectedly or unprepared.

2. Compare your lifestyle plans to your financial future.

What you plan to do with your time when you leave work will determine your financial needs. Traditional retirement planning looks at fixed costs, but often doesn’t take into account the cost of retirement activities such as travel, new hobbies, increased entertainment or unexpected costs associated with an illness or assisting grown children or grandchildren.

3. Do your research.

Research a variety of sources that specifically target finances in retirement. An Internet search of “Managing Finances in Retirement” will deliver a plethora of information for your consideration.

Q: What should someone do if they’re not confident with money management?

A: It’s important to face your fears and admit you need help. An accurate assessment of where you are financially and what the gaps are will provide relief and the foundation for a plan to guide you forward. Luckily, there are lots of options for support. A site like has a more do-it-yourself approach that offers retirement planning tools and calculators that help you plan your finances. But if you prefer speaking with a real person and a less hands-on approach, seek financial advice and support from certified financial planners, financial advisors and brokers.

Q: What are potential challenging money situations to budget for in retirement?

A: You’ll want to budget for two main scenarios:

1. Economic

The rate of return on your investments over the long haul cannot be predicted. There are no guarantees on return. The inflation rate over the long term of retirement is equally unpredictable.

2. Personal

How long will you live? While it’s difficult to estimate, take into consideration your activity level, nutrition, family history, genetics and current health statistics. Also look at what kind of lifestyle you would like in retirement in terms of travel, entertainment, hobbies, education, self development, home purchases, etc. You’ll also want to plan for expenses from unforeseen events such as health challenges, financial aid to children or other family members, or changes in other income streams.

Q: Sometimes the idea of retirement is more romantic than the reality. What are common pitfalls that you’ve seen in your coaching practice? How can they be avoided?

A: There are four common pitfalls that I often see:

1. Underestimating the role of routine in your life.

When you’re working, forced routine plays a big role in life’s meaning and also gives you relative predictability of your finances. Generally, clients often don’t realize before they retire that more time to fill often translates to a need to be stimulated, and this results in spending more money than they budgeted for (i.e., more shopping, eating out, trips, etc.). For several of my clients, this resulted in going back to work to eliminate the debt they’d accumulated after 12-24 months of overspending in retirement. They either revised their budget to include these activities or tried to do more free or low-cost activities.

2. Difficulty adjusting to changes in your social network.

Friendships that you had when you were working may not sustain themselves in retirement. Often what you had in common was only work. If you neglect to either recognize this or cultivate other shared interests with your work friends, you’ll find yourself in a position where you have to make some new friends. This isn’t as easy as you age. But joining groups, volunteering and traveling with like-minded people can help to replace lost friends. It’s a trial and error process.

3. Realizing that you have to design your own day.

The dream of a leisurely, fun-filled retirement is myth even for those with a plan. Of course, those with a plan are more prepared for the challenge of having to design their own day; however, sometimes life has a different plan for us. This could be disappointments and delays to long-held travel plans because of your health or sudden change in financial situation. It can also be the realization that you’re still very performance motivated in retirement and feel there’s now nothing to aspire to or work for.

For some, the transition of becoming a “being” rather than a “doing” person is fluid, but for others it’s more difficult. For example, if you find yourself still driven by performance, you may want to continue working on a part-time or project basis to fulfill that sense of achievement.

4. Discovering that extra leisure time isn’t as enjoyable as you thought it’d be.

Equally important, and often a surprise and disappointment, is that once you can do whatever you want, whenever you want, it’s not as special or enjoyable as it was when you worked. Part of what made it so wonderful to have vacations was because you couldn’t do it every day.

The antidote to this is to start adding more meaning to your more relaxed lifestyle through self-development. Doing deep dives into what were superficial hobbies or interests can add fulfillment, meaning, interest, excitement and energy to your days and keep them from becoming boring and mundane. Instead of spending more money, invest in yourself by using another currency — time.

Q: Healthcare costs and decision making in retirement are constant concerns. How important is appointing a power of attorney before retiring?

A: In my experience, discussing power of attorney is a delicate yet very critical part of retirement transition coaching. As a first step, I recommend getting informed about the different types of powers of attorney available and what they mean. Some examples are durable, non-durable, special or limited, medical and springing.

This will naturally lead to the second step of involving your family or designated people in a discussion about your current and future needs, wants and desires. I encourage clients to see this as a necessary, powerful opportunity to design, control and direct how they want to live their life if their faculties are diminished or their health deteriorates. For many, it provides peace of mind.

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