In this video Matt and Chris, highlight the importance of setting clear goals during retirement. They emphasize that these retirement goals can sometimes differ from pre-retirement goals, such as balancing spending with preserving capital for long-term care or inheritance. To help clients align their goals with their financial plan, they recommend a scoring exercise where clients rate the importance of various objectives. This recalibration process is crucial to ensure that retirement plans align with clients’ desires and priorities.
Hello, matt with EWA. Chris with EWA. Today we are talking about retirement tip five and the fact that goals during retirement are actually more important than goals before retirement. Chris, give us a rundown of why this is.
Yeah, so generally, we see whenever a client is entering retirement, there’s many goals for, for example, spending today and enjoying in your younger years versus preserving capital for maybe a long term care event or keeping money behind for inheritance purposes or charity.
All of these different moving pieces are happening at the same time. And oftentimes we’ll see maybe somebody with a very strong balance sheet, for example, may have a score of ten out of ten. From a financial standpoint, what’s a good.
Exercise to help clients recalibrate their goals and make sure that their money is actually supporting their life by design during retirement? Yeah, sure. So one of the exercise that we’ll go through with clients who are retired is we’ll ask them to score different areas based off of what they want for their plan.
For example, 1 may be maximizing retirement income today for spending. What’s that desire for you out of ten? Maybe it’s an eight out of ten or a ten out of ten. And then second one could be, how important is it to leave an inheritance for your family?
Or how important is it to leave money behind for charity? Oftentimes we find that the client’s answers are not in line with what the plan is actually doing. So, just to give a quick example, we sat down with a client a couple of weeks ago, and they told us that they love their kids, but inheritance is not something that’s very important to them.
Their kids are successful. They’re able to sustain themselves, but. Their spending patterns right now, they could spend two to three times as much as they’re currently spending. So they were set up to leave their kids several million dollars in this case.
So if we’re not proactive here and asking these questions, we find that things can go out of balance with what the client’s goals are versus what the plan is actually doing when it’s live. Interesting.
So it’s almost like the the habits and disciplines that made a client successful entering retirement are getting in the way of any kind of recalibration process that needs to happen. The saving saving even though that ten out of ten was a rank for the retirement spending plan and then I think in the case you’re giving, inheritance was like a four out of ten.
In reality, the operating plan was a four out of ten spending and a ten out of ten legacy. It was the opposite of what they wanted to do. And now that conversation has helped think about recalibrating.
But again, because spending is so psychological during retirement, we anticipate this will be a couple of years before the recommendation of hey, increase double what you’re spending is actually taken.
But during your young active years, it’s really important to have these considerations front of mind to make sure that all of the dreams and goals you had for vacations or traveling or charitable endeavors are able to take place where you’re young and healthy.
And then also balancing that with your goals for legacy health care, long term health care, everything else that could happen during retirement, it certainly is a balancing act. But a recalibration process every year we found is very helpful.