Most people I talk with have a fear of running out of money in retirement:
- Do I have enough money to last in retirement?
- Will I have to work part-time?
- Do I have enough money to do the things I want to do?
- Will I have to sell my house?
- And many more!
These questions stem from a lack of clarity, so even those with sufficient investments are not immune to them. Their gut reaction is to take the Rope Approach–hanging on and hoping it lasts. To make the most of what you have, you need clear answers to these questions and more. You need to know how these answers will affect your individual retirement.
Lack of clarity leads to lack of confidence, and lack of confidence can lead to costly decisions.
I see common mistakes people make when they don’t have confidence in their plan.
- They spend less. They tend to tighten the reins and spend less to avoid dwindling their funds. Every decision they make is now based on how much something costs. On the rare occasion that they splurge, it is mixed with feelings of guilt.
- They work longer. They might think, “If I’m healthy, I might as well keep working.” They postpone their retirement dreams and add years of work and stress to their lives.
- They do less of what they want to do. They begin to cut back on their retirement plans. They travel less and enjoy fewer activities. They just do not do the things they want to do in their retirement years.
- They are too aggressive. It might not be as common, but some people take too much risk with their investments, gambling for a big payoff. Taking unnecessary risk does not solve for lack of confidence and could create problems that did not exist before.
