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What’s important and different about being a woman in your fifties heading toward retirement?

Assuming that the money you have saved is not augmented by an inheritance (parents needing care can eliminate an inheritance) or some other significant influx, how should you think about your retirement? Three things:

1. Know your values.
2. Know your expenses.
3. Know your risks.

Values: You have the freedom to spend money on what is in line with your values. What do you value? IF it is a trip abroad, are you willing to be sure you can cover the expense by choosing wisely about how often you are eating out or having a drink (often expensive) with friends?

Are you still pulled into spending more than you want because the whole group is going to do this, or buy that? You go to an expensive restaurant and others are having drinks and appetizers. Your meal was on the less expensive side. They decide to split the bill equally. Is that what you intended? You’ve just subsidized their good time.

Ask before you spend money, which of my values is this enhancing: staying fit, giving to charity, looking good, being financially secure?

A professor who had retired from teaching decided that the cost of cut and color was no longer worth it. She had her hair cut and let it go gray. Those dollars could be spent elsewhere.

Thinking about your values may make each thing you spend money on an addition to your life not just an expenditure.

Expenses: Budgets can be as detrimental to good health as diets. However, the world of guesstimates is also dangerous. You need a baseline which shows you THIS is what you are actually spending. It includes dry cleaners, vet bills, postage, apps, costs for repairs and maintenance of your home. IF your home is a house, then the detailed costs down to having the gutters cleaned and the AC / heating system tuned up must be included. Such details are often overlooked. No wonder people look for reverse mortgages.

Figure on expenses rising by at least 4% a year with medical costs increasing by 5% or more. If you want to be independent and secure financially, you want to have the numbers helping you, not haunting you.

It is likely your portfolio can be improved to grow the income and the principal. Growth and guarantees can create a tranche of security. Talk with someone knowledgeable who you trust.

Risks: If you had to be quarantined for 14 days, is your banking set up to pay the bills? Who walks Fido? Who takes the car in for an inspection? Who returns the books to the library? Who brings in the groceries? Who does the laundry? What if you need not 14 days of care but long-term care? Do you have a devoted group of friends and extended family who would commit to being there daily to take care of you? IF not, how are you planning to address this risk?

You are used to being your own backup, but sometimes that isn’t enough. What are you putting in place to cover health and financial risks?

Being an independent, single, woman headed to retirement is an invigorating time because it can all be on your terms. You can have a retirement that is satisfying and full of self-discovery. It’s all in your grasp if you have thought deeply about what is important to you, your values, how your money supports your values and how you have braced yourself for health and financial risks.

Enjoy your days!

The markets have declined and so have many portfolios.

A client called me and asked which of three options she should take: 1) stay put; 2) sell everything; 3) commit suicide. Fortunately, she meant the third option to be humorous.

Here are the guidelines I suggest.

1) If your account statement shows a loss, it is a paper loss until you sell. When you sell, you lock in that loss, that lower dollar value. Keep in mind the difference between a paper loss and an actual loss.

2) If you bought an investment because it was good quality, give it time to recover. The comparison I make is if a healthy person gets the virus (not covid-19), then rests, gets proper nourishment, etc., that person is likely to be fine in a week or two. A good investment is like that though the recovery time may be different. So, just be patient.

3) If you are not confident that your investment will recover, or you think is will lose more value, then consider an investment that will guarantee growth. There aren’t a lot of guarantees in the investment world, but annuities do offer guarantees based on the claims paying ability of the issuing company. Would it be acceptable to you if your portfolio grew at a guaranteed 5%, 6%, or 7%?  If you answer, yes, then learn about annuities and understand their benefits and limitations.

They are long term investments with fees, and restrictions. I’ve written, Annuities-Retirement Promises or Traps to introduce you to this type of investment. You can download it here.

You might ask, “Wouldn’t I do better just to wait for the market to bring up the value of my portfolio?” Maybe. But, consider this if you are nervous about it sinking more, or how fast it will grow back, you could take just a portion of your portfolio and invest it at a guaranteed rate, that portion would be guaranteed to grow at a specific rate for a specific time.

This action might make you feel better and also help your money grow.

There are many types of annuities but what I have found as a financial planner for over several decades is that those in their 60’s and 70’s might find two types of annuities attractive for their purposes.¹ One is a Single Premium Immediate Annuity (SPIA) and the other is a Variable Annuity with a Living Benefit. Those are explained more fully in the Annuities article.

Any investment should be a right fit for your goals and your mindset.

4) Explore and learn about investments. Look at the history of the stock market. Notice the downturns and the recoveries. When you see those patterns, you have a context for understanding what is happening now.

Purposeful and thoughtful investing lessens stress and can help you be a successful investor.

I’d like to share with you a perspective on retirement.

Entering retirement is like entering you late teens – without the acne.

What do the two time periods of our lives have in common?

Uncertainty, vulnerability, changing identity.

Uncertainty in the years to come

When we are in our late teens there are big unknowns:

• Am I going on to college, which college?
• What will the course of study be?
• Will I marry? Who will I marry?
• What kind of job will I find?

Entering retirement also has very big questions with answers that are just as uncertain.

• Will my money last?
• Will I be able to stay in my home?
• Will I stay healthy and able?

Vulnerability

As teenagers and as retirees—we may feel that we are at the mercy of our emotions

Our reactions may be out of proportion to whatever event triggered them. Suddenly we experience surging emotions –passion, depression, anger, or fear.

Sometimes we feel out of control not sure what is pushing our buttons.

In both time frames, we may feel we don’t have much control, or power to shape our lives?

Changing identity

The teenager is finding a voice, maturing, trying to fit in, be liked and be taken seriously.

The retiree may be asked: “What do you do for work?”

Perhaps the retiree happily answers, “I’m retired.”

OR maybe the person says, “ I used to be…. such and such.” The title at work gave the person an identity and gave structure to the day. The retiree is not ready to completely remove that identity and is trying to figure out what to do with the hours of the day, and asks:

• Who am I if I am not that person who did such and such a job?
• What do I do all day?
• Well, the volunteering, gave me something to do. It whiled away the hours.
• I wish there was something I could do that is worthwhile.<>/li

Are the sentiments above going to express your view when you have time on your hands?

As you head to retirement, why not have a discussion with yourself, or others about these ideas:

Uncertainty– What does your future look like?

When you were 18 what did you guess or think would unfold in the next five years?

Did what you expected to happen, actually happen?

Now that you are retired – what do you expect or guess might happen in the next five years?

Vulnerability

Who are you emotionally?

When you were 18 what were you passionate about?

what got you angry?

What did you fear?

At your current stage of life, what are you passionate about? what makes you angry? What do you fear?

What is the same emotionally? What’s different?

What do you feel in control of?

Identity

Who are you?

What is your gift to others now?

For what talents, or actions do you want to be remembered?

Try out this comparison of you as a teenager and you now and see what it leads you to. You might rediscover deep interests that you set aside for years, because of the pressures of making a living.

You may find more to treasure in your life, more to live for, and more vitality.

May your retirement be a lively one with the energy of a youth and the wisdom of age.