How to maintain your lifestyle in retirement

Planning for retirement can be daunting for anyone, regardless of income level.

You may be intimidated by how you’ll maintain your current lifestyle when you’re no longer working – or have concerns about leaving the right legacy for your beneficiaries or cherished charitable organizations. Yet amid these concerns, many people delay retirement planning as they build or grow their businesses and prioritize other objectives.

But to meet your long-term goals and leave the kind of legacy you want, it’s important to start planning for retirement well before it arrives. Here are seven strategies to help you work toward maintaining your lifestyle during retirement.

1. Build a vision for your retirement lifestyle

Start by envisioning what you want this next phase of your life to encompass – and don’t be afraid to get detailed about your goals and desires. For example, if you currently take a few big trips per year, will you want to maintain or increase that level of travel? Maybe you want to be able to help your children or grandchildren pay for college or leave behind a charitable legacy.

“When we have these initial goal-setting conversations with clients, we often find that their main concerns extend beyond themselves into their family and the legacy they want to leave behind,” Carson says. They want to find ways to maintain their lifestyle and the lifestyle of their family without hindering any charitable organizations they also want to support.

This is where speaking with a financial professional pays off. They can help you brainstorm what your ideal retirement looks like – and help you balance living your ideal lifestyle while still supporting the people and causes you care about.

2. Know where your money is coming from

It pays to take a solid financial inventory to work toward maintaining the lifestyle you want in retirement. Your primary income may go away upon retirement, but do you have a comprehensive understanding of the income sources you’ll start to pull from once you’re no longer working? List every source of income you’ll have, such as:

• IRAs and 401(k)s

• Regular bank/savings accounts

• Health savings accounts (HSAs)

• Social Security benefits

• Stocks

• Life insurance

• Annuities

• Business interests, especially if you’ll be selling

Also, consider any specific rules or timelines around when you can begin withdrawing from each specific source.

3. Know where your money is going

Equally important as listing your income sources is listing your debts and projected expenses during retirement. While unexpected events arise, list every expense you can plan for, including monthly household expenses and debt payments like a mortgage.

4. Understand potential tax implications

While accumulation planning is important – asking yourself how much you need to save for retirement – distribution planning is an equally important consideration that not everyone considers.

Distribution planning considers the impact of taxes on different sources of income, which will determine how much of your assets will be preserved or depleted in retirement. Ask yourself: Is this asset taxed as ordinary income, as long-term capital gain, or is it tax-free? Your accumulation plan should include tax-diversified sources of retirement income. Remember that it’s not just what you earn; it’s what you get to keep after taxes.

If you can factor in tax implications for withdrawals during your planning, you’ll enjoy a more secure retirement.

5. Factor in unplanned events and risks

Although unpleasant, it’s also important to consider potential risks that could drain your retirement income, such as market volatility or the cost of long-term medical care.

For example, it’s ironic that the time when you’ll stop earning money in the traditional sense is also the time in your life when you have a higher chance of facing costly medical expenses. Statistically, nearly 70 percent of people who turned 65 today will need long-term care at some point — making it something you need to plan for.

Though you may consider self-insuring, it’s important to realize that long-term costs are significant. For example, the median yearly cost of assisted living is roughly $52,000 a year, and nursing home care can range from $93,000 to over $100,000 a year. Traditional long-term care insurance (LTCI) can help you offload that liability to a third party. LTCI can help you mitigate the risk of draining your retirement savings due to a chronic illness or medical problem.

6. Plan your retirement income withdrawal in phases

Just like you can’t predict what medical expenses may arise, you also can’t predict what will happen with the markets during your retirement. Let’s say you retire at age 65...you will likely have at least 18 years of life expectancy. Most people don’t plan for that long period of life post-retirement. Inflation, increased healthcare expenses, and market volatility during this long stretch could impact your available reserves.

We recommend viewing retirement — specifically your investments — in phases. This can help you manage your portfolio and lifestyle expenses more strategically. Think of phase one of retirement as taking you from 65-75. You’ll have sources of income begin to come in, such as pension income, Social Security, and required minimum distributions from qualified retirement plans and IRAs. Once you start hitting your mid-70s, that’s phase two, when you also access your longer-term investments.

Revisit your investment regularly to ensure you’re planning for your retirement's short- and long-term phases.

7. Review plans yearly

Lastly, retirement planning is far from a set-it-and-forget-it task; a yearly check-in is recommended to ensure that your plan is on track.

Invest In a Life You Love,

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