Vacations can cost more than expected, especially if you have a large family or an exotic destination in mind. Several of my clients love to treat their entire extended families to a variety of family trips.

Some of my best memories are vacationing with my family. I’m sure yours are too. That’s why I advocate for every family to set aside time and money to vacation together. But the key is planning.

Big price tag purchases can change your tax bracket, hurt your investment strategy, or even postpone your retirement date.

If you want to plan for an elaborate family trip without wrecking your retirement plan, here are a few tips to get you started.

1. Start planning & saving early.

I recommend estimating the total cost of the trip, and then add a 10% cushion. This should cover possible inflation or unexpected costs.

Next, start a savings schedule. Open a separate account and contribute to it every month. Little by little you’ll reach your goal and be able to track your progress.

Planning early can also provide opportunities for early booking specials and discounts when reserved a year or more in advance.

2. Set expectations and communicated them.

Another, equally important aspect of logistical planning is setting expectations with those who are going.

If you are going to pay for the trip, it’s even more important to communicate your expectations. Who is going? How will you deal with boy/girlfriends? What activities or meals should the group participate in? Will there be a family photo with coordinating outfits?

It’s also important to be clear about costs. There are both “upfront” costs such as flights and hotels, but also “on the ground” costs like meals and excursions.

These might seem like small details, but I promise you, that if you’ve saved for months for a trip, you will have expectations (spoken or unspoken) about what the trip will be like. To avoid any hurt feels or frustrations, sit down with everyone who’s going and figure out what this vacation should look like.

3. Set yourself up for success.

Vacation is all about making memories and spending time with those we love and cherish most.

But don’t let it hurt your retirement. Start planning and saving early, set proper expectations, and check with your trusted Financial Advisor to make sure your retirement is still on track.

With these few simple tips, your next family vacation can be both fun and financially feasible!

Start Planning!

The post How to Plan a Family Vacation without Hurting Your Retirement appeared first on AWM.

This is especially true in 2020 with the COVID-19 pandemic leaving many Americans unemployed or uncertain about their job security.

What is early retirement?

Some people choose to retire early because they can afford it. Others might not have a choice. In 2020 alone, many of our clients were confronted with layoffs, severance packages, or concerns about health issues.

What should I do?

You might not have a choice. Your employer may simply eliminate your position or even the entire department. If you do have a say in the matter, here is the process you should follow:

1. 1. Educate yourself.

Understand all your options and their consequences. Ask questions and take notes. Learn the implications and consequences of choosing one option over the other. You need to have all the facts when making a decision.

Most of the time, decisions about retirement are permanent. If you accept a severance package, chances are your employer will not hire you back.

1. 2. Work with a Fiduciary Financial Advisor.

Find an experienced professional and talk through your options. They might recommend a hybrid approach you haven’t thought of. They can even brainstorm questions to ask before challenges arise.

A Fiduciary Advisor might also help you plan for outside factors like Social Security and health care costs. Unfortunately, rising health care premiums and taxes can leave you with less income to spend.

Remember, it’s not about how much you make.  Rather, it’s about how much you keep after all expenses and taxes are paid.

It’s important to work with someone who is experienced and can help you find the right option for you and your family.

1. 3. Put your plan into motion.

It can be scary to take the leap, but if you’ve done your due diligence and follow your plan, you will have peace of mind knowing you’re protecting your family. Your plan is like a roadmap, giving you a clear picture of where you’re going.

Don’t forget to check-up on your plan too. Life changes quickly and can impact the success of your retirement.

Try to stay positive.

These are trying times and you might be forced into a decision you didn’t want to make.

Having a solid plan in place will not only ease the stress and anxiety of retiring early, but it will also help you make wise decisions during uncertain times.

You deserve to enjoy your retirement. After all, you’ve earned it.
 

Let’s Get Started

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Unfortunately, one in three families will not have enough money to maintain their lifestyle throughout retirement.

Through these conversations, I’ve been able to narrow down three major pitfalls that many savers make before retirement.

1. They have no plan.

Life gets busy. It’s so easy to put off planning for retirement. Tomorrow is a convenient excuse.

There’s a shocking statistic from AARP: only 23% of Americans have some sort of retirement plan.

Many people spend upwards of 30+ years in retirement. Having a strategic plan is the only way to successfully enjoy retirement with confidence.

2. They didn’t save enough.

This relates closely to #1. Without a plan, how can you know if you’ve saved enough?

There are so many factors that need to be considered. Things like inflation, health care expenses, taxes, the unexpected (like COVID-19), and much more.

If you’re not sure how much you need to enjoy a successful retirement, I strongly encourage you to seek out expert advice and start planning today. Retirement will come faster than you think.

3. They mismanaged their investments.

I see this every single day. And it boils down to three things:

People often invest their savings poorly. Whether it’s holding too much of one position or investing in unreliable holdings, I see people putting their retirement nest egg at risk and even losing a large portion of their assets.

Secondly, budgeting. I’ve known families that make several hundred thousand dollars in annual income, but have nothing in savings and too much in debt. It’s so important to follow a measurable and achievable budget.

Lastly, I think some people are too quick to gift their money to the next generation. Not only might you need those resources for your living expenses, but think about the lost potential returns and future income you might be giving away prematurely.

So, what does your future look like?  Do you know?

It is time to invest in yourself and reap the rewards of your labor.

Keep more of your income and pay less in taxes.

Let’s Talk

The post Why Do So Many People Fail in Retirement? appeared first on AWM.

Ambassador Wealth representatives speak with our clients about their investment goals and retirement planning objectives on a daily basis. Each of our clients has a unique story and a diverse lifestyle—some are experts in their field, business owners, corporate executives, and entrepreneurs. Despite their individuality, they seek out our help for the same common need—to be successful in retirement.

By walking alongside our clients and helping them through their retirement planning, we glean many insights on how they became so successful.

We also get to see firsthand what they are doing to maximize their lifestyles today. To better share these insights, we’ve compiled our top 75 retirement tips into one easy-to-read guide.

To get your copy of 75 Retirement Tips from Petr Burunov, click the button below to download.

Get my free guide

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However, many people struggle with the transition into retirement.

What is the Honeymoon Phase of Retirement?

According to Dr. Joseph Coughlin, there are four phases of retirement.

The first being the honeymoon phase. If you pay any attention to advertising, you might be expecting your retirement years to be filled with beaches, bike riding, golf, and whatever else strikes your fancy. Once you stop working, it’s true that you will have more time on your hands to do the things you love.

But those romantic advertisements neglect to tell you something.

Once these activities become a routine, they might not continue to provide the happiness you were hoping for.  Instead of being stressed in your working years, you might find yourself bored and restless in your retirement years.

The Honeymoon Will Not Last Forever

Retirees will experience different levels of financial, cognitive, physical, and social resources throughout their retirement years. The longer you are in retirement, the more these resources will diminish.

Let me explain. Financial resources tend to be the highest in the honeymoon phase of retirement because retirees have just started to spend their savings. Aging, for the most part, hasn’t taken its toll on the body and mind at this point either. Because of this, your lifestyle and health can feel similar to life during your working career.

How You Can Survive – and Thrive – in the Retirement Honeymoon

The first stage of retirement is often the hardest to adjust to. Recent retirees have to re-establish their routines, roles, and relationships.

1. Breaking your life-long Routine.

   Get up. Get ready. Eat breakfast. Go to school or work. Come home. Eat. Go to bed.

   Sound familiar? We’ve all been doing this since kindergarten. Retirement can break this routine since there is nothing forcing you into this habit anymore. You now have so much time on your hands. All this freedom can sound enticing, but if you’re not sure what to do with it, boredom can set in very quickly.

2. Roles will Change.

   Your career probably gave you a sense of pride, purpose, and self-fulfillment. Once you retire, you might miss that identity and sense of accomplishment. If you are not prepared for this big change, you might feel under-appreciated and lost in a world without structure.

   Your family might also have assumptions about your new life. They may want more of your time and energy. Set boundaries for yourself as you re-discover your new identity as a retiree.

3. Relationships will change.

   Once you stop working, you might miss the socialization, intellectual stimulation, and sense of accomplishment from the career you built.

   In the honeymoon phase of retirement, you will likely spend less, if any, time with co-workers and more time with your spouse. This is a big adjustment, especially if you and your significant other don’t share similar interests or social groups. If you haven’t thought through this transition, sharing chores, how to spend leisure time, and managing the household can also turn into conflicts.

   You should also think through the amount of assistance you are able to provide for family members, like aging parents. If they need financial support, this can cause stress on your relationships if you have little flexibility in your retirement budget.

Tips for a Smoother Transition:

1. Plan your new routine – How do you plan to spend your time? What are your hobbies? What actives will fill your day? Take some time and plan out your new routine. Think about your long and short-term goals. Moving towards these goals can be very fulfilling and could give you a sense of purpose.
2. Do some soul searching – Retirement is a big change and requires a new identity. Maybe you will get involved with a local non-profit or learn a new skill like woodworking.
3. Develop new relationships – Look for ways to replace your work relationships with new ones. Maybe take a class or work part-time to meet new people.
4. Give yourself time – You might not find your retirement groove right away, and that’s okay. It can take six to twelve months to really adjust to a new situation and way of life.
5. Seek out clarity about finances – Before, during, or after you retire, it’s a good idea to seek out professional advice from a fiduciary financial advisor. They can help you understand your financial situation and create a retirement income plan.

Thriving in Retirement Still Involves Work!

Defining your new role, routine, and relationships will take time, planning, and effort. You might even be pushed out of your comfort zone, but it’s so worth it. Think of the alternative—a boring and lonely retirement.

As you near retirement, it’s easy and understandable to feel anxious for all the change. You will have a smoother transition if you have a proper plan in place and know what to expect.

Rather than viewing retirement as a single “life stage”, you might benefit from having a conversation with your financial specialists to reflect on all the phases of retirement and plan accordingly.

Start the Conversation

The post Don’t Get Stuck in the Honeymoon Phase of Retirement appeared first on AWM.

Money might not buy you happiness.  However, money can make happiness last longer.

According to researchers led by Dr. Raj Chetty of Stanford University [source], the more wealth you have, the longer you are expected to live.[1]  Possible reasons why wealthy people might live longer include:

• Lower death rates from substance abuse and violent crime
• Better access to health care
• Less psychological stress from financial issues
• Ability to afford living in a moderate climate

More Money Matters in Clark County, WA and Metro Portland, OR

People with greater income also tend to live longer in our local area of Metro Portland and Clark County.

Data compiled by Alvin Chang at vox.com [2] show that people in Clark County who earn above the median household income of the average family live anywhere from 3-8 years longer.  The general trend also applies to metro Portland and the states of Washington and Oregon.

Women live on average a couple of years longer than men.  Yet, the similar trend of higher income leading to longer life expectancy applies both to women and men.

Social Security: Case Study of One Major Decision That Can Impact Your Retirement

Your choice of when to retire could impact the rest of your life.

Social Security is a major component of funding your retirement.

Let us take a simple, hypothetical example of a single woman named Marge.  She is currently working and has to decide when to retire.  Marge is in pretty good health, so physically she has flexibility as to when to stop working.

Social Security Decision: When Should Marge Retire?

The table above highlights an important aspect of Marge’s decision.  The later she retires, the more income she would earn over her expected life in retirement.

For instance, if Marge chose to retire early at age 62, she could earn Social Security income as much as $1,950 per month.  Applying the median life expectancy for women in Clark County of 86 years old, Marge would enjoy 24 years of retirement.  She would earn about $561,600 from Social Security during that time.

In contrast, if Marge chose to work another 8 years and retire at age 70, she could earn nearly $100,000 more in income during retirement.  By waiting, Marge’s maximum monthly income would rise to $3,432.  Her lifetime Social Security income would total $658,944.  In other words, Marge could earn $97,344 in higher income simply by waiting a little longer to retire.

Is $100k more in retirement worth waiting for?

How We Can Help You Navigate the Complexities of Retirement

Marge’s case study includes many simplified assumptions.  As a matter of fact, Social Security, and retirement, in general, are quite complex issues for many people.  Realistically, what might apply to people similar to Marge might not necessarily apply to your specific situation.

However, we have worked with many different people, both individuals and families, who face the same questions.  While you face complexity in life, our job is to help you simplify life and navigate through these issues.  Let us also not forget that your real goal in retirement is to celebrate life.  We would love the opportunity to hear your unique story and work together with you.

Schedule appointment

[1] Raj Chetty, Ph.D., Michael Stepner, BA, Sarah Abraham, BA, et.al., “The Association Between Income and Life Expectancy in the United States, 2001-2014”, April 26, 2016, on https://jamanetwork.com/journals/jama/article-abstract/2513561  accessed on June 29, 2018.

[2] Interactive Chart in Julia Belluz and Alvin Chang, “What research on English dukes can teach us about why the rich live longer”, July 27, 2016, on https://www.vox.com/2016/4/25/11501370/health-longevity-inequality-life-expectancy  accessed on June 29, 2018.

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