This episode of the HerMoney Podcast is part of our new, monthly retirement-focused series, brought to you by LIMRA. With practical tips and real-world conversations, these episodes – dropping on the third Wednesday of each month – will give you the tools to help you feel more confident about what comes next. Don’t miss out – subscribe here!
When we talk about retirement planning, many of us focus on the saving part. But the real challenge comes later – turning that nest egg into a paycheck that lasts as long as you do.
Christine Benz, director of personal finance and retirement planning for Morningstar, joined the HerMoney Podcast for a conversation about the smartest ways to prepare for retirement. Her message? There’s no single “right” way to do it – but there is a way that’s right for you.
THERE’S NO ONE-SIZED FITS-ALL PLAN
In her new, bestselling book, “How to Retire: 20 Lessons for a Happy, Successful, and Wealthy Retirement,” Benz asks retirement thought leaders to go deep on one lesson they believe matters most. One of the biggest takeaways? A good retirement plan is personal – and has to fit you both financially, as well as mentally.
“The retirement income approach that makes sense for us is really the one that fits with us psychologically,” explains Benz. “Some people might have an appetite for safety… which is what you would get if you purchased an annuity; you’d get the same stream of cash flows if it’s a very basic income-producing annuity.”
Others, she points out, might want more flexibility and control over their investments. “The experts vary so significantly in their approaches to retirement income distribution, I think that’s one of the most surprising aspects of the book.”
FROM SAVING TO SPENDING: A MENTAL SHIFT WORTH PRACTICING
Another big hurdle for many retirees? Learning how to spend after decades of saving. To make the shift less scary, Benz suggests practicing before you retire.
“The key point is just to get yourself a little bit warmed up, so it’s not like on day one is your first withdrawal ever,” she explains.
And, if you’re not a budgeter, now’s the time to become one. An approach she recommends is reverse budgeting, where you set a savings target first, hit it and spend what’s left every month, guilt-free. “That’s the basic framework we [Benz and her husband] use as savers,” she says.
Benz and her husband became more intentional about budgeting at the urging of their financial planner, who wanted them to understand their biggest spending categories – and how those might change in retirement.
“I do think that reverse budgeting is a phenomenal tool for people who are in the savings mode,” she shares. “But as you get closer to retirement, it’s helpful to have a little bit clearer picture of where and how you’re spending your money.”
ARE YOU ON TRACK? If you’re ready to start putting together a retirement plan that works for you, download LIMRA’s free Retirement Income Planning Starter Guide.
THE BIGGEST RETIREMENT BLIND SPOTS
According to LIMRA research, only about one-third of consumers ages 45-75 have a detailed retirement plan. Benz says that lack of clarity – especially around withdrawals – is one of the biggest blind spots she sees.
Some people worry so much about running out of money that they underspend, missing out on experiences or opportunities for lifetime giving. Others risk the opposite – spending too much, too fast.
Her advice? Don’t go it alone.
“Even if you’re not ‘all in’ with a planner or advisor, just get a second set on the plan that you’re thinking about,” suggests Benz. “Don’t wait until the 11th hour…get ahead of it when there’s still time to make some adjustments to your budget and to your assumptions about how much you can withdraw from the portfolio.”
WHY RETIREMENT PLANNING IS DIFFERENT FOR WOMEN
For many women, retirement anxiety runs deeper, and for good reason. We tend to live longer, which means our money has to stretch further. We’re also more likely to step away from work to care for children or aging parents, which can reduce lifetime earnings and retirement savings.
Starting to save early matters, but so does staying connected to the workforce later in life, when possible.
“If you take, say, a two or three-year break when you are 58 or in your early 60s, which is often when we’re thrust into these caregiving roles, it’s super hard to get back in,” says Benz. “It puts much more pressure on any amount that you’ve been able to save. It necessitates longer withdrawals over a longer life expectancy. It may force your hand with respect to decisions like when to claim Social Security.”
FEELING OVERWHELMED? HERE’S WHAT YOU CAN DO TODAY
If retirement feels overwhelming, you’re not alone. But there are concrete steps you can take right now to feel more prepared.
Start by mapping your income: Run the numbers on Social Security at different claiming ages. Factor in any guaranteed income, like a pension or annuity. Then estimate – conservatively – what your investments might provide. “See whether those two sources combined – the guaranteed sources of income and your portfolio income – get you close to what your budget is,” says Benz.
Adjust where needed: If there’s a big gap, explore your options. Can you tweak your retirement budget? Work a little longer? Save more now? Little changes can make a big difference.
Sit down with a pro: “Get some direct feedback on your personal plan because I think that can provide you with a lot of comfort and peace of mind,” says Benz. Even before you meet with a financial professional, get an idea of what your options are with LIMRA’s free Retirement Income Planning Starter Guide. It includes the points you should discuss with your financial professional to make sure you’re on track for the retirement you want.
And one final reminder – don’t let embarrassment stop you. “Advisors have seen it all. They will try to help you figure out how to make up for the shortfall. Get over the fear that you’ll be judged.”
MORE ON HERMONEY:
- 3 Types Of Annuities To Secure Your Financial Future
- No Retirement Savings? Here’s How To Catch Up
- How To Start Investing If You Only Have $1,000 (Or Less)
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