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Retirement and Personal Financial Sustainability


Near retirees and retirees must consider lifestyle options as well as wealth building in retirement planning.  An affluent retired dentist shared with me that he thought he would be living a champagne lifestyle in retirement; now he is on a beer budget. Retirees have some rugged financial roads to travel as a result of the changing economy. Finding reliable counsel and advice is a challenge.  Stock market advisors may cling to old cycles for reassurance.  Those who hedge on real estate may be over leveraged to the point they risk loosing everything.  Conservative retirees have suffered extreme lows in interest bearing and dividend incomes.  When will recovery buoy retirement plans? 


Personal Financial Sustainability is about establishing balance between wealth building and quality of life.  If near retirees and retirees depend exclusively on accumulation, recovery, and growth of investments they may be at far greater risk than appropriate.   Here are some tips for moving toward Personal Financial Sustainability.


·     Protect your asset base.  If you have elderly parents and they are financially compromised find out about Medicaid coverage sooner rather than later.  Well intentioned adult children who drain assets targeted for retirement may never recover from the losses. High income pre-retirees are most vulnerable to this exposure.


·     Ten years in advance and continuing throughout retirement, use this simple calculator annually to determine income you may expect based on your available assets.  Personal Financial Sustainability in Retirement is balance between assets available to fund income and income requirements.  Using this simple comparison table provides an opportunity to make conscience decisions regarding the critical balance between investment strategies and lifestyle choices. (Use your own numbers, download this simple excel table ) 


Planning For Personal Financial Sustainability in Retirement

Money Talks, LLC  Spring 2009










Available Funds

 $                200,000


 $                     200,000

Rate of Return




Number of Payments Per Year




Number of Years in Retirement








Monthly Income

 $                  714.18


 $                    1,235.65


·     Make choices about lifestyle adjustments well before there are no choices.  In the past I have counseled many elderly folks about participating in choices before their children are forced to make decisions for them.  Now I am talking with Boomers.  If retirement assets won’t support current lifestyle choices begin making adjustments before retirement.  


·     Don’t be afraid to think radically.  Habits are difficult to break, particularly life long habits.  If you have a high cost lifestyle and a lot of exposure to inflation; get out of your box.  Too often we stack lifestyle decisions on one another; burying the critical force of Personal Financial Sustainability.  Here are some things to consider:

    1. Do you really need and want to live in a large house with yards and all the maintenance expenses?
    2. Do you really need and want to own a car or two?  Could you use public transportation and rented vehicles?  Do the numbers; think about lifestyle!
    3. How would retirement look if you lived close to your passion/priorities? What would you cut to make that life happen?
    4. Entering retirement with limited resources and personal debt lowers financial sustainability factor dramatically. The routine use of credit increases exposure to inflation and allocates valuable assets to interest expenses rather than quality of life choices.  Create a pre-retirement debt reduction plan.
    5. Come to terms with investment risk tolerance. Investment advisors are beginning to encourage near retirees and retirees to increase investment risk exposure in order to recoup losses and stretch investments for longer life expectancies.  Using the table, Planning for Personal Financial Sustainability in Retirement, consider investment risks in relationship to lifestyle choices. 
    6. The signature of retirement is more discretionary time.  How will extra time be filled?  How much will it cost?  Assumptions that income needs will decrease or increase significantly upon retirement generally hinge on this social/financial factor. Social networking through free and affordable sources is a powerful tool for Personal Financial Sustainability.  Begin finding resources that will support your retirement activities; anticipating the cost of an active social life is a critical part of planning.  The retired dentist at the beginning of this article still enjoys travel, boating, and entertaining, he just moved from first to business class.

Don’t wait until forced to accept the consequences of not having a plan.  Plan now, use assumptions on which you can most likely depend, build a life that sustains quality retirement.