Without clarity and confidence about our post-employment life, we may hang on, longer than necessary, in a state of fear, immobilized by the mysterious darkness of retirement beyond. But worse than that, we could be forced out of employment involuntarily before we have had time to lay the proper groundwork. Planning ahead offers us a soft landing. Otherwise it could be a hard landing.
In a soft landing, as in real-time aviation, there is a flight plan specifying where and when we want to put down. The soft-landing retirement is distinguished by two necessary and essential elements: confidence in realizing desired income and confidence in being able to reduce the risk of bad markets and inflation. For some of us there is also the ability to know we can leave a legacy to our children.
The two elements of confidence may seem self-evident, as in, “So what’s new and what action is called for here?”
Probably the greatest hurdle to overcome in transitioning from the employment world in which we save or accumulate our retirement kitties is to accept that it’s no longer about portfolio return. Many soon-to-be retirees continue to want to hold on to portfolio return as the key reward. No, now it’s about charting a course with the confidence we’ll enjoy our desired income without risking running out due to bad markets, unplanned expenses, or just living too long.
As I’ve frequently written, when we land in retirement, there’s a paradigm shift. It’s no longer about the amount of our retirement savings—the size of our “pile.” Rather it’s about how to maximize the income that the pile can generate in support of our goals and values.
Qualified planners have the sophisticated calculation tools to test under various adverse circumstances our ability to realize our desired income over typical retirement horizons of 30 years or more. The final reports from these tests can provide you and me the confidence we’ll need for retirement peace of mind.