Preparing for Retirement Challenges

Preparing for Retirement Challenges

By A. Scott White, CFP®, ChFC®, CLU®
President, Scott White Advisors

The custom of retirement was introduced during the late 1800s. Before then, most workers continued to work until death due to low life expectancy and the absence of financial planning. Today, more people are choosing to enter semi-retirement, where they reduce their work hours or commitments, before retiring completely. Regardless of when you plan to retire, once you decide you want to retire completely, you will enter a period of “pre-retirement” until your actual retirement. That’s an ideal time to take a serious look at some of the challenges you could face during retirement—and plan for them.

  1. Inflation: Preserving purchasing power

In financial planning, we refer to retirement as the “asset distribution phase.” Each year during retirement, everything you buy will cost more than it did the year before. For example, in 1990 a postage stamp was 25 cents; today it has more than doubled to 55 cents. Holding a percentage of your retirement savings in equities is one way to potentially reduce the risk that inflation will adversely impact your portfolio. Many financial professionals advocate adjusting allocations—both before and after your retirement date. For example, equities may be 55 percent of your portfolio at age 65, and 35 percent at age 80. Another aspect to remember is the order of returns, not just their averages, and how that can affect the longevity of your retirement assets. If returns perform poorly during the initial period of your retirement, you could easily deplete your retirement savings.

  1. Longevity: Not outliving savings

Better health care and longer life spans mean you could spend up to one-third of your life enjoying retirement. Your goal is to ensure your retirement assets last for as long as you need them. To keep your retirement income flowing, it’s important to check your budget regularly (monthly or quarterly) to ensure you’re not overextending yourself. Being adaptable and flexible with your budget is vital to a successful retirement. Also, you’ll want to anticipate unexpected events that could potentially impact your financial picture. If you discover your housing expenses are exceeding your budget, you can move to a home that is less expensive and easier to maintain, and the sale profits can then be added to your reserves. You may also want to consider long-term care (LTC) insurance. LTC insurance helps cover nursing home costs or assisted living. The earlier you begin purchasing LTC insurance, the more reasonable the premiums.

  1. Emotional: Finding fulfillment in retirement

There’s a difference between being busy and being fulfilled, and planning for fulfillment is important. When is the last time you sat in a quiet place and thought about what you truly want out of your retirement, and what a successful retirement looks like for you? Regardless of your vision, embrace this new chapter of life and take the time to do what you always promised yourself you would do. Retirees find purpose and fulfillment by mentoring, teaching or volunteering. Many times they discover new passions. Professionals say that when you move into retirement, expect a transition period of 2 to 5 years. However you spend your time, make the most of it.

  1. Physical and/or cognitive: Declining body or brain health

There are steps you can take to help keep your body—and your brain—healthier as you age. Stay physically active and make physical activity part of your everyday life. Physical exercise is essential for maintaining good blood flow to the brain as well as to encourage new brain cells. Aerobic exercise improves oxygen consumption, which benefits brain function. Professionals recommend avoiding sitting as much as possible. Getting out of your chair—and connecting with others—is vital. Having somewhere to go on a regular basis has shown to help keep us healthy and engaged. And when it comes to brain health, leisure activities that combine physical, mental and social activity are the most likely to prevent dementia. Also, it’s advisable to follow a healthy diet and get plenty of sleep.

  1. Legacy: Spending vs. saving for heirs and causes

Remember the advice that flight attendants give us—put on your oxygen mask before helping your child with their mask? The same applies to retirement: Use your funds to take care of your needs before leaving money to your heirs. Yes, many of us want to be sure our children and grandchildren have better lives in our estate planning. But it’s not uncommon for retired people to deny themselves enjoyment so they can help their heirs. Unless they are disabled, your children and grandchildren can work for the life they want to achieve—just as you have. So when you establish your retirement budget, remember to indulge yourself a bit. As someone said to me, “There are loans for colleges. There are no loans for retirement.”


Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification and asset allocation.  Past performance may not be indicative of future results. Keep in mind that individuals cannot invest directly in any index. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market.

Please note, changes in tax laws may occur at any time and could have a substantial impact upon each person’s situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.