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How to Achieve Your Retirement Lifestyle Goals

By Jon Maxson, CEO, Senior Partner, and Financial Advisor

and

Dan Benson, CFP®, EVP, and Financial Advisor.

You’ve been working for it your whole life: a happy retirement. No more morning commutes, clocking in, budgeting vacation days, or meetings that could have been e-mails. For most people, letting go of your professional life means beginning an entirely new lifestyle.

By the time you’re ready to start enjoying retirement, hopefully you’ve been working a comprehensive financial plan for years; one that takes your dreams and goals in retirement into account at every step. In this article, we’ll talk about some of the most common retirement lifestyle goals we see with our clients and offer practical strategies on how to make them your reality.

Retirement Goal: Finding Your Dream Home

Being happy at home is key to a happy retirement. In fact, Morgan Stanley found that people who spend more time pursuing interests at home in their retirement years—like entertaining friends and family, or doing house projects, like remodeling—are more likely to be able to cover the costs of their retirement lifestyle compared to those who travel most of the time.1

As soon as you know the area you want to retire in, start looking for a place you’ll love to live. Be sure to have answers to questions like:

  • Do you want to live in a retirement community?
  • If so, what kind of activities and amenities are important to you?
  • Do you want an apartment, townhome, or detached house?
  • How many square feet do you want? (Southern Living claims 1,500 square feet is ideal for retirees.2)
  • What is your budget? (Don’t forget to include property taxes, homeowner’s insurance, and HOA fees.)
  • What features will help you most enjoy your new home?
  • How close do you want to be to a church, hospital, grocery store, or public transportation?
  • How long will you be able to use stairs?

Once you’ve made those basic but crucial decisions, find a real estate agent you trust—preferably one who has experience working with retirees. Make sure they’re clear on your priorities and what kind of home it will take for you to live out a happy retirement.

Retirement Goal: Traveling

Seeing as much of the world as you can is a worthy dream, so it’s no surprise that travel is the most popular goal in retirement. A recent study found that 65% of retirees cite travel as their top retirement dream.3

Travel retirement goals for a happy retirement

According to Value Penguin, vacations cost about 2% of U.S. household budgets each year—with an average cost of $581 per trip within the country, or $3,251 internationally.4 Keep in mind those numbers are an average, which includes everything from newlyweds going camping for a weekend to a family of four going to Disney World. But the travel you want to do when you’re no longer working and have more time to spend away could easily cost more than that.

That’s why it’s never too early to start planning and prioritizing travel in your financial plan.

Once you’re retired, it’s a good idea to go ahead and withdraw the amount you’ve earmarked for the next three to five years’ worth of travel expenses. That way, if a down market comes along, your travel lifestyle doesn’t take a hit.

Market volatility isn’t the only thing that could impact your goals in retirement—don’t forget to account for inflation. Inflation can impact how much you’ll have to spend on food, gas, and everyday necessities—plus interest rates on mortgages, loans, and credit cards. According to the Bureau of Labor Statistics, today’s prices are 1.72 times higher than average prices in the year 2000.5 So if you were dreaming of a $5,000 trip overseas 20 years ago, that same trip would cost $8,600 today.

Even if inflation rises at a temperate pace of less than 3% each year, your retirement savings needs to generate an average rate of return equal to that. (This rule applies to the money you’re hoping to use for all of your financial goals in retirement—not just travel.)

Retirement Goal: Downsizing Your Lifestyle

Once the kids are grown and out of the house, one of the big decisions you might end up considering is whether or not to downsize. Moving to a smaller home can free up some money to enable you to enjoy retirement with more cushion and comfort.

(By the way, if you’re unsure whether or not you’ll have enough money to afford your retirement lifestyle, now is the time to evaluate your income plan.)

Here’s how you can take those first steps to downsizing your property:

1.    Decide where you want to live.

When planning to downsize you’ll have several things to think about besides selling your home. Do you want to be closer to family, or is there a favorite place you’ve visited in the past where you want to spend more time? Be sure to consider facilities you’ll want to be near, like a church, grocery store, or hospital.

Think about what your lifestyle could look like five to ten years ahead. You might enjoy the quiet outdoors now, but would a remote cabin in the woods still be a good idea a decade from now? Another option is to live in a retirement community, where certain amenities like lawn care, tennis courts, and even a pool are included. But will your income continue to be able to support the HOA fees that come along with a place like that? Are there methods of transportation you can take if you have to stop driving?

2.    Budget for your new retirement lifestyle.

Once you’ve committed to downsizing, start budgeting how much you’ll need to get by each month. Your budget will likely include money for:

  • Hobbies
  • Healthcare expenses
  • Travel
  • House cleaning
  • Utilities
  • Gifts
  • Groceries and other expenses of daily life

Getting an accurate picture of how much your retirement lifestyle could actually cost is the key to truly enjoying it! You’ll be so thankful you did this on the front end to ensure you don’t overstretch your finances and stress over trying to afford unexpected bills or vacations.

3.    Start cleaning out your house.

Downsizing means getting rid of stuff you don’t need or want anymore. Plus, creating more space in your current home will make it look appealing to buyers when you put it on the market.

Start by clearing out any clutter and unwanted items. Now, you might be wondering how to know if you’ll regret giving something up. Marie Kondo—bestselling author of, The Life-Changing Magic of Tidying Up—says to ask yourself the question, “Does this item spark joy?” If it does, that’s a good sign you should keep it. But if it doesn’t, it’s time to let it go.

You might want to pass on heirlooms to loved ones, or have a yard sale or sell your stuff online. Craigslist, Poshmark, and Facebook Marketplace are all great options. If that’s too much hassle, there’s always your local estate sale company, Goodwill, or thrift store.

Retirement Goal: Starting a Business

A recent study found that one in five retirees hope to start a business in their retirement years.6 Entrepreneurship isn’t just for yuppies on the West Coast anymore—in fact, the Harvard Business Review found that middle-aged and older Americans are starting up businesses more and more.7

What better time to pursue your passion than in your retirement? You finally have time to do it, not to mention more working experience than you’ve had at any other point in your life. If you enjoy woodworking, maybe you could start selling pieces. If you enjoy baking, you could sell your goods locally at farmers markets or by order request. If you enjoy helping people or teaching, consider tutoring or teaching piano lessons.

The U.S. Small Business Administration is a great place to get started. Their free, comprehensive “10 Steps to Start Your Business” guide includes direction to:

  • Conduct market research
  • Write your business plan
  • Fund your business
  • Pick your business location
  • Choose your business structure
  • Choose your business name
  • Register your business
  • Get federal and state tax IDs
  • Apply for licenses and permits
  • Open a business bank account

The retirement lifestyle of an entrepreneur can be busy as well as rewarding. Just make sure you’re not spending all of the money you’ve worked your whole life for on your new business venture. Small business lender Kabbage found that 84% of small business owners become profitable sometime in the first four years of opening.8 But it all depends on your type of business, and when you start it up.

For example, if you started sewing cute face masks in early 2020 and sold them on Etsy, you probably made a killing. In 2022, maybe not so much. Also, service-based businesses tend to be more profitable than product-based business because there’s less overhead.

Retirement Goal: Paying for Healthcare (Without Going Broke)

Healthcare is one of the largest expenses in retirement, which is unfortunate, because it’s probably not the way you dreamed of spending your hard-earned money. How much you’ll end up spending on healthcare will depend on when and where you retire, how healthy you are, and how long you live.

Life expectancy has gone up, just like healthcare inflation—which outpaces the rate of general inflation. Medicare is helpful, but it won’t cover everything. Thankfully, there’s a smart, easy way to put tax-free money aside for future healthcare expenses: a health savings account.

An HSA is an account that lets you put aside money on a pre-tax basis, designated for qualified medical expenses. As long as you use that money to pay for medical expenses, you’ll never need to pay tax on that money.

The 2022 annual contribution limits for an HSA are:9

  • Individual: $3,650
  • Family: $7,300
  • If you’re over 55, you can make catch-up contributions of up to $1,000 more than these maximums

Per Healthcare.gov, “Unspent HSA funds roll over from year to year, allowing you to build tax-free savings to pay for medical care later.”10 This is great news for anyone planning ahead for healthcare expenses in retirement!

You may have already started one through your employer, but here are the three keys to making sure your HSA allows you to enjoy your retirement lifestyle:

1.    Max out your contributions

Why leave tax-free money on the table while you’re still working? Moving $3,650 or $7,300 into your HSA every year will make a big difference once you’re retired, especially since it rolls over and earns interest each year.

2.    Don’t use the funds right now.

Continue contributing to the account, but don’t touch it. Since you’re still working and earning money right now, it should be easier for you to pay for current medical expenses out of pocket than it will be in retirement.

3.    Invest and let the funds roll over and grow each year.

Most HSA providers give you an option to invest your funds once you have a minimum balance in the account. Like any investment, there is some risk, so talk to an experienced financial advisor to see if this is a good option for you; but this is an untapped opportunity for many.

primary vs. contingent beneficiary info

The 2021 Devenir Research report found that accountholders who turned on the investing piece had an average total balance of $19,224 in their HSA—which is 7.3 times larger than an average funded non-investment holder’s account balance.11

As with any savings, the earlier you start contributing, the bigger that pile of money will be when you retire. But even if you’re approaching retirement now, you can take advantage of those catch-up contributions to give your future health a little extra love.

Retirement Goal: Generosity

Being a generous giver is consistently proven to be a key to a more fulfilling life, and even delayed mortality.12 So we can assume generosity creates a happy retirement, too.

Beacon Capital Management is headquartered near Nashville, Tennessee—the 5th most-generous city in the U.S.13 There is no shortage of opportunities to serve our community here, and doing so is one of our core values.

Whether you’re planning to volunteer in person, donate to more charities you care about, or even babysit your grandkids for free, these are all worthy, rewarding goals in retirement. You can even use your Required Minimum Distributions as a tax-free option toward charitable giving. Don’t overlook discussing your charitable ambitions with your financial advisor to make sure it’s reflected in your overall financial plan.

The Best Way to a Happy Retirement

The last thing you want to do is get to retirement and feel unsettled or unprepared—or worse, feel like you’re stuck working longer than you wanted! You’ve worked hard to achieve a happy retirement lifestyle. An experienced financial advisor can bring clarity and confidence to your financial plan.

Even if you’re already working with another financial firm, we’d love to give you a second opinion on your current portfolio. Set up a free, no-obligation consultation with one of our experienced, trusted advisors in Tennessee today.

top goals in retirement