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Transitioning from a life of diligent saving to one of mindful spending can be one of the most challenging adjustments for new retirees. After many years of focusing on accumulating wealth, watching your investments grow, and building a financial safety net, the prospect of drawing down on those savings can feel counterintuitive, and can even be anxiety-inducing. This psychological shift could be more daunting than the stress experienced during your working years, as it requires breaking away from deeply ingrained habits and potentially overcoming mental and emotional barriers.
For many who have been successful in accumulating wealth, the same habits that helped them save diligently can become obstacles in retirement. The identity tied to being a “saver” can make spending feel like the opposite of the values that led to financial security in the first place. However, this mindset shift is important as retirement should be about enjoying the benefits of years of work, not just safeguarding assets.
The primary financial objectives for many retirees typically revolve around maintaining financial security, maximizing retirement income, and, often, leaving a legacy. Balancing these goals is critical to an enjoyable retirement. Without the steady income from employment, concerns about longevity, inflation, market volatility, and healthcare expenses can make financial security feel precarious. Yet, it is equally important to allow yourself the freedom to enjoy your retirement, which often means giving yourself permission to spend.
For many retirees, adopting a holistic approach can be helpful. Retirement can be an opportunity to focus on your health and well-being, carving out free time, having new experiences, and redefining purpose. Prioritizing your health is arguably the most important investment you can make in retirement. This might involve increasing physical activity as you are able, spending more time focusing on diet and nutrition, or joining wellness programs or classes. These investments not only have the potential to enhance your quality of life but also help ensure that you are physically and mentally equipped to enjoy your retirement years to the fullest.
Consider the value of your time and how best to use it. If your financial situation allows, delegating tasks, if you are able, such as housekeeping, lawn care, or long-distance driving—can free up time for activities that bring you joy and reduce stress. This approach to spending isn’t about extravagance but more about optimizing your time and energy.
Retirement is the perfect time to schedule experiences that bring you joy and fulfillment. Whether it’s traveling, spending time with family, or exploring new hobbies, investing in these experiences enriches your life. Consider planning trips, hosting family gatherings, or trying out new activities that you’ve always wanted to explore.
For those who find spending challenging, charitable giving can help provide a profound sense of purpose and satisfaction in retirement. Whether through financial donations or volunteering your time, contributing to causes you care about can be incredibly rewarding. Additionally, it’s possible to give back in a tax-efficient manner, such as through Qualified Charitable Distributions (QCDs) from your IRA, to align your generosity with your financial plan.
Your home should be a place of comfort and joy, especially in retirement. Whether this means moving to a location with a climate that suits your preferences, relocating closer to family, or simply renovating your current home to better meet your needs, investing in your living environment can greatly enhance your overall happiness.
Having a sense of purpose in retirement is vital to staying mentally and emotionally engaged. This could involve part-time work, consulting, volunteering, or pursuing passions that give your life meaning. A sense of purpose not only enriches your days but can also contribute to a healthier, more satisfying retirement.
Retirement should be a time to enjoy the rewards of your hard work and careful planning. However, shifting from a saving to a spending mindset requires thoughtful consideration and, at times, the guidance of a financial advisor. By focusing on your health, valuing your time, creating meaningful experiences, giving back, enhancing your environment, and maintaining a sense of purpose, you can help ensure that your retirement is not only financially secure but also deeply fulfilling and richly rewarding.
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Important Disclosures:
Securities and advisory services offered through EWA LLC dba Equilibrium Wealth Advisors (a SEC Registered Investment Advisor).
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stock of companies maintained and reviewed by the editors of The Wall Street Journal.
* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
* Asset allocation does not ensure a profit or protect against a loss.
* Consult your financial professional before making any investment decision.
In 15 minutes we can get to know you – your situation, goals and needs – then connect you with an advisor committed to helping you pursue true wealth.
EWA, LLC dba Equilibrium Wealth Advisors, is an SEC-registered investment advisory firm providing investment advisory and financial planning services to clients.
Investments in securities and insurance products are not insured by any state or federal agency.
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In 15 minutes we can get to know you – your situation, goals and needs – then connect you with an advisor committed to helping you pursue true wealth.