What can someone do when they want to retire, but simply don’t have enough money to? I recently spoke with Caitlin Nish, a reporter with The Wall Street Journal, about our approach to helping clients transition into retirement.
Many people think of retirement simply as the time in life they no longer have to work, says Alan Moore, founder of Serenity Financial Consulting LLC in Milwaukee, Wis. Instead, he encourages clients to view retirement as the period in which they can do what they want.
Mr. Moore, whose one-year-old firm primarily does hourly financial planning, often talks to clients about working part-time in retirement. Just $500 a month in income can help preserve a big chunk of retirement savings, he says. “You don’t have to replace your current income to have a dramatic effect.”
Mr. Moore frequently enlists a career coach to work with clients interested in part-time work. The coach helped one client, a high school Spanish teacher, switch to teaching adult education classes that produced the same income with a shorter work week.
One of the most important things we help clients do is find a career that they love, and can continue doing past the normal age of retirement. Even small amounts of part-time income helps to preserve your investments until you can truly no longer work and need the funds.
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Are young investors terrified of the market? This is a question that a lot of experts are asking after a recent study showed that 43% of investors aged 18 – 34 consider themselves to be conservative investors. Christine Dugas, a personal finance reporter with USA Today, asked what I’m seeing from my young clients when it comes to investing.
“They are scared of the market and understandably so,” says Alan Moore,a financial planner and founder of Serenity Financial Consulting in Milwaukee. “Many have seen their parents lose 50% of their retirement savings in six months.”
The real issue is that the number one advantage young investors have is time; Time to recover from losses, and time for compounding interest to have a dramatic effect. Being invested conservatively at a young age means making financial sacrifices .
Moore understands the problems that Millennials face because he is 25 and many of his clients are members of his own generation. And if they are only willing to invest 40% of their savings in stocks at a young age, vs. 80%, he tells them that they will have to consider other options to boost their retirement savings, such as saving more, buying a smaller home, or working longer.
There is a trade off with every financial decision. It is my job as a financial planner to help educate clients on those trade offs, and then work with them to implement the option they feel is best for them and their family.
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