You've done all of the planning and preparation for retirement and you're about to move into the next phase. So what now?
Make Sure Everything is Set up Correctly
Now you have some time on your hands, make sure that you have everything set up optimally. Run a final sweep on your financial affairs and make tweaks as necessary. Double-check that your investment approach is optimal.
Look back at the posts about Investing for Longevity, and make sure, if you’re going to be drawing down from your accumulated capital, that you have some measure of a cashflow ladder planned out and implemented.
Ensure that you have cash on hand to cover your ad hoc expenses and general living costs for your first two years of drawing down, whether that’s literal cash in the bank, or an element of your invested pots in pensions and ISA, for example, which are invested in cash.
Make sure that when you do start drawing down, the money is in fact coming from the cash portion. Make sure your instructions with your platform or pension/ISA providers are being correctly executed.
The last thing you want to happen is for you to have set aside two years in cash and then realise your invested funds are being sold each month to cover withdrawals because you missed something in the instruction stage.
Establish a Rhythm of Reviews
You’re going to need to keep an eye on things fairly closely in the early years of your retirement, but in due course things will find a level and settle down. As I mentioned in the previous set of posts, you don’t want the management of your finances to take over your life, so be sure to set some boundaries for when you’re going to review things and keep things in their place.
I suggest that for the first couple of years at least, you set quarterly review dates and take stock of a couple of things each quarter. Firstly, how much you’re spending relative to what you thought you were going to spend and in light of that, the size of your cash pile. If you’re spending more than you think, you might need to reassess of the size of the cash pot you’ve left for yourself.
You can keep an eye on how your investments are doing, though be wary of making unnecessary changes at this early stage. Once a year you can formally review things, taking into account the performance of your investments, rebalancing where necessary and moving money down the cashflow ladder.
You should use that opportunity also to plan your spending for the coming year in light of the spending of the previous year, and to reposition your pieces as necessary. The goal is to make the management of your cashflow and portfolio as easy as possible so that it doesn’t take up too much headspace.
Monitor Your Feelings
As time goes on and you get used to the new normal, it’s a good idea to keep half an eye on your emotional response to the change in circumstances. Are you feeling like you thought you would, or different?
Are you enjoying retirement, or are you enduring it in its current form? Whether you choose to act on those feeling or not is up to you, but I think it’s wise to be aware and intentional about your thought and emotional life.
Celebrate!
Finally, don’t forget to celebrate this momentous step into retirement. Take a holiday, crack open a bottle of Chateauneuf or Macallan or do whatever you want to do to celebrate. You have achieved a great thing; the financial security to live life entirely on your own terms.
As I said at the beginning of this blog series on retirement, retiring is a big deal and worthy of marking the occasion I reckon. The mode of celebration is up to you. It might be taking your family on a holiday (that’s what my Dad did when he retired), or just quietly raising a glass to yourself at home. But do mark the achievement in some way – you’ve earned it!
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