Retirement? Ask lots of questions first

Luke Davis
Your money

COVID has been hard on us all, but maybe harder on baby boomers than any other group. A survey conducted in August by Coventry Direct provides some interesting insight into the mindset of today’s working seniors.

Luke Davis

According to the survey, nearly four in five boomers wish to retire earlier even if it means a more modest lifestyle in retirement. The survey also said the majority of these respondents are not interested in post-retirement employment of any kind.

What this tells me is boomers are exhausted. A little over a decade ago they saw the value of their homes and retirement accounts plummet due to the financial crisis of 2008, and they watched again as the market fell at the onset of the pandemic. Since that time, their world has been turned upside down by our shared response to the virus.

For many boomers, the adoption of new technology, new work environments, and new safety protocols, paired with a shortage of workers, has made their jobs far more difficult than they were previously. This, combined with 401(k) balances that are likely near all-time highs, is driving many to choose to retire sooner than originally planned.

Simply put, they are done, and I can’t blame them. I am barely in my 40s and I feel physically and mentally drained by everything going on around me. But, as tired as we all may be feeling, jumping into retirement without knowing you are ready can actually add to your burden, not reduce it.

That is why I would suggest you sit down with an experienced financial adviser before making any rash decisions regarding your future. It’s true you may be able to look at your current savings and do some back-of-a-napkin math to estimate how long it should last, based on your current expenses. That is not enough, however.

Other factors need to be considered that you might not have thought about. What happens if the cost of living goes up substantially over the next decade? What if you or a spouse require major medical care for an extended period of time? What if the market experiences another significant drop like it did in 2008? What if medical advances cause you to live far longer than you think you will?

These are just some of the questions that require more than a best-guess answer. They require an unbiased analysis by someone who is interested in your future well-being and not just in selling you a product or an investment. This is why I only recommend you sit down with a fiduciary.

Established as part of the Investment Advisors Act of 1940, the fiduciary standard states that an adviser under it must put their client's interests above their own. Their recommendations must be based on what is the best course of action for the client, not what generates the most revenue for themselves. If you are unsure if your adviser is one, ask them. They are required by law to disclose that information.

If you don’t already have a financial professional you trust to go through the numbers with you, email me at lkdavis@stewcap.com. I would be happy to walk you through a simple questionnaire that can give you a good snapshot on how close you are to being financially ready for retirement free of charge. Who knows? You may be even more ready than you think you are.

(Past performance is no guarantee of future results. The advice is general in nature and not intended for specific situations.)

Luke Davis is the director of operations and compliance at Stewardship Capital in Independence.