Planning for the life you want in retirement

Focus on goals, not just wealth.

Retirement is often framed as a reward for your diligence. Many who started saving early in their careers arrive at retirement better off than anticipated, thanks in part to conservative planning. You might need less than you thought, or end up with more than you expected. Like earlier in your life, it’s time to make plans, adjusting as you go. Instead of asking “Will I have enough?” consider “What will I do with what I have?” Here are some ideas:

Live it up

Retirement’s early years can be special. You have the time, money and self-assurance to do the things you always wanted. Buy your dream car, renovate the kitchen, camp under the aurora borealis.

Before making major expenditures or assumptions about income, have a thorough conversation with your advisor about new lifestyle goals. This will change your financial plan, and that’s ok if you account for it.

Pursue a passion, professionally

Maybe you spent a career in engineering, but your true interest is ceramics. Now, you have the time and resources to open the pottery workshop you’ve always dreamed of. The economics of owning a small business may be a little different in retirement, too. You may find that tangential benefits like having a place to focus your energy and the daily structure it provides matter as much as, if not more than, the profit it makes. It can provide hands-on business education for children or grandchildren, too.

Even a small enterprise can be a major undertaking, so it’s important to approach it with the diligent business planning it deserves. Be aware of your exposure to liabilities, protect your personal interests by engaging with your professional team, and don’t let this venture’s obligations compromise your other goals. This is meant to feel rewarding.

Give it to your kids

We often wish to provide our children a better life than we had ourselves. Options include giving them money directly (though there may be tax considerations depending on the amount), managing what will eventually become their portfolio for them, or through a 529 education savings fund, a starter home or an investment in their business.

Recognizing that money changes relationships, “family governance” is important. This may include documents that operate as bylaws for the family’s financial decision-making. It’s also about managing family dynamics, with financial vehicles like trusts to set expectations and provide transparency and assurance. Candid conversations with your children and grandchildren about the family’s wealth and what they may expect can be awkward at first, but being open and honest will help keep your relationships strong.

Give it to charity

Philanthropy provides an opportunity to help others while tapping your skills to steer an institution close to your heart and improve your community. You may prefer to work behind the scenes, or up front, depending on your goals. Philanthropy also presents an opportunity to share your values with family members by involving them in your giving decisions.

There are many ways to give in a manner that suits your goals and circumstances—writing a check, volunteering your time or talents, creating a trust, creating a private foundation and several more depending on your goals. No matter what vehicle you use, a giving strategy that’s attuned to your financial plan and tax strategies can help you extend the reach of your giving.

Your next moves

A financial planning approach to retirement looks at wealth in terms of goals, not in terms of volume. You prepared. That preparation is now presenting you an opportunity. Pick a goal and go for it. Just make sure to keep your financial plan up to date.

Certain conditions may apply to 529 education savings funds. Earnings in 529 plans are not subject to federal tax and in most cases state tax, as long as you use withdrawals for eligible education expenses, such as tuition and room and board. However, if you withdraw money from a 529 plan and do not use it on an eligible education expense, you generally will be subject to income tax and an additional 10% federal tax penalty on earnings. As with other investments, there are generally fees and expenses associated with participation in a 529 plan. There is also a risk that these plans may lose money or not perform well enough to cover education costs as anticipated. Most states offer their own 529 programs, which may provide advantages and benefits exclusively for their residents. An investor should consider, before investing, whether the investor’s or designated beneficiary’s home state offers any state tax or other benefits that are only available for investments in such state’s qualified tuition program. Such benefits include financial aid, scholarship funds, and protection from creditors. The tax implications can vary significantly from state to state.