In the business world I often talk with our clients about managing the relationship they have with their business. After they sell their business the conversation often moves from talking about the relationship to your business to your relationship with your finances.
When we move from active work to retirement, we also change how we must think about our finances. If we truly retire and stop working, we no longer have new cash flow coming in every week or month. The things that we might want to think about when this change happens is:
- How much of a cushion if any do we want with our assets?
- Where do we want to live and what should we do with the home we’ve lived in?
- How much time do we want to spend travelling and how much will it cost for us to do so?
- What are the personal disasters that could hit and what would they cost if they did?
- How important is for us to have a guaranteed amount of money every month? If it’s important where will that money come from?
- How long do I think I will live? What happens if I live longer than I expected?
- Are there subsidies that I’ve been providing for my children or grandchildren that I’m not going to be able to continue providing?
- How do I want to spend my time? Does starting a completely different career make sense?
It’s important to remember that when we hit normal retirement age and we’re in reasonably good health, we still have a long time to live. Understanding how we’re going to live our life, how we want to manage our assets and what we’re going to spend our money on is important.
If you haven’t formally thought about these issues, it might be a good idea to informally think about them and definitely have a conversation with our significant other about our thoughts.