Dreaming of a great retirement? - Is retirement sneaking up on you or are you counting the days? Before it gets too close, make sure you take one of the most critical first steps: start dreaming.

By Jack Gordon

Can you see your retirement on the horizon yet? Perhaps it’s just 10 to 15 years away. How’s it looking? Will you have what you need to succeed? Perhaps you’ve already outlined the novel you’ve always dreamed of writing or filled your shelves with books about great destinations you plan to see. Or do you still have some work to do? Maybe the fear of retirement sticker shock has stopped you in your tracks, and you can’t imagine ever being in a position to quit working.

Whether your retirement strategy needs a little tweaking or a complete overhaul, now’s the time to make a change. You’re in a perfect position to have a realistic picture of where you are financially. The missing link for many, because they are caught up in the challenges of day-to-day living, is they haven’t taken the time to dream. “There’s no reason why everyone can’t succeed in retirement,” says Patrick Egan, national retirement spokesperson for Thrivent Financial. “But if you want to plan for a dream retirement, you first have to define the dream.”

Kent Jensen, a financial representative with Thrivent Financial in Burlington, Washington, wholeheartedly agrees. Regardless of where you are in your life, “Visualizing the goals we want to achieve is as important as financial preparation,” he says. One drives the other. “Only by setting goals, based on your values, can you get excited,” he says. And excitement is a great spur to following through on your savings strategy.

Just ask Thrivent Financial for Lutherans member Fred Michels. “Retirement has been a lot of fun, I’ll tell you,” says Michels, 85, of Tavares, Florida, who retired 23 years ago at age 62. “Right now I’m looking out on a beautiful lake, a mile across. My lawn goes right down to it.”

Michels and his wife, Alice, spent their working years in the public education system in New York and Delaware—she as a teacher, he an administrator—not spectacularly lucrative fields. Yet, they put four children through college and still help to support a son who works for Campus Crusade for Christ. For the first 10 years of retirement, they divided their time between the Florida house they designed themselves and a townhouse in Delaware. They also have traveled to China and Russia and have been active volunteers at Faith Lutheran Church in Eustis, Florida. The Michelses would be the first to tell you they have enjoyed a dream retirement and never felt they made any significant sacrifices to achieve it.

So, how did they pull it off? They had a dream for retirement. Michels knew he wanted to retire at 62: “My slogan was: ‘Out the door in ’84.’” By establishing a vision of their ideal retirement, the Michelses had a goal toward which they could work, plan and save.

Do you want to be like Fred and Alice Michels? Or do you have a completely different retirement dream? Maybe you have some vague ideas but haven’t begun to think about how you’re going to get there. You’re not alone.

“More often than you’d imagine, people retire without giving any real thought to what they want to do or how they’ll pay for it,” observes Carl Leibner of Tavares, Florida, a financial representative for Thrivent Financial who works with Fred and Alice Michels. “I know a couple who retired and moved to Florida. The husband died unexpectedly, and the wife went on living as they had before. When she came to see me, I showed her that unless she changed her habits, in seven years she would have used up most of her investments.”

Fixing the problem required no great sacrifice on the Thrivent Financial member’s part, only better money management, Leibner says. By making relatively painless changes—moderating the amount she was gifting, discontinuing an expensive country club membership she rarely used, and eating out a little less often—she was able to secure a perfectly comfortable lifestyle for many years to come. If she and her husband had talked about and planned for “what happens if one of us passes away” while he was alive, Leibner says, she could have made some of those changes earlier.

“On the other side of that coin,” Leibner says, “I’ve worked with retired people who worry about every dollar they spend, and I show them that they may not live long enough to spend all their money.” Such people often come to realize that they are cheating themselves out of perfectly attainable dreams.

So, how do you picture your ideal retirement? Do you want to volunteer? Live in Hawaii or in a cabin in northern Vermont? How about opening that business you’ve always talked about? At this stage in your life, you can begin to put a real price tag on some of these dreams and make sure you’ll have enough savings to fulfill them.

“It’s worth taking time to think about,” says Egan. “This generation will have an active retirement. Not everybody wants to sit in Adirondack chairs, walk on the beach or play a lot of golf. So what do you see yourself doing? You need to know that in order to get a realistic picture of how much money you’ll need and how you should manage it.”

A new beginning

If you are in your 50s or early 60s and haven’t discussed your retirement vision with your financial representative, it’s time to do so. The conversation could be eye-opening. A number of studies show that the average 50-year-old has well under $100,000 in retirement savings, Egan says. “The good news is that your 50s are typically prime earning years, so if you need to catch up by saving more, you still have a good chance.”

Retirement planning is more complex than in the past because “you have to plan to live into your 90s these days,” Egan says. “People say, ‘I’ll only live to be 75 because my father died then.’ But health care has changed dramatically, and the statistics are incredible.” Citing a Society of Actuaries 2000 annuity mortality table, he points out that if a married couple is 65, there is a 50 percent chance one of them will live to be 92.

An eye toward the future

Regardless of how much you have socked away, it’s not just your total assets that count but how you invest and manage them. If you’re going to retire at 65 and live another 20 or 30 years, then “successful” retirement becomes, above all, a matter of not outliving your money.

Diversification always has been important to your investment strategy, but now it takes on new meaning. “For years, conventional wisdom was that investments should become more conservative as you near retirement,” says Jensen. “But with a longer retirement, you still need growth to ensure that your investments—and your retirement income—will be able to keep up with inflation.”

A key tactic is to create a balanced, diversified portfolio that will help you meet your needs at each stage of retirement. “You need to accomplish three goals,” explains Egan. “The first is to generate income in the near term, or the first years of your retirement. The second is to protect your assets. After all, you worked hard to save the money and you want to be able to enjoy it. The last goal is to grow your investments over the long term so that you have adequate income during the last years of your retirement.”

“By thinking about your retirement in phases, it’s easier to understand that your short-term income must be safeguarded against market downturns, while other assets must continue to grow in order to support you down the road,” says Jensen.

Anticipate the unexpected

One of the greatest retirement assets you have—one that many often overlook or take for granted—is your health. Doing everything you can to maintain an active, healthy lifestyle will give you the most flexibility and opportunity in your retirement.

Still, despite your best efforts, sometimes unforeseen circumstances can interfere with your retirement vision. Your 50s are a good time to look into long-term care insurance and to think about other contingencies that can adversely impact your retirement dream.

Another challenge pre-retirees face is debt brought on by either helping children with college loans and down payments on first homes or shouldering some of the expense of caring for elderly parents. In these cases, you need to have a strategy to manage your debt and make sure you don’t carry it into your retirement. This may be a good time to encourage your children to develop a higher degree of financial independence, because the reality is you can’t take out a loan for retirement.

The big picture

Whatever your age, your situation or your vision, there is plenty you can and should do both to protect your assets and to make them grow. The more specific your dreams for your pending retirement years, the easier it will be to chart a realistic course to make them come true. Achieving your dream retirement may be easier than you think.

Jack Gordon is a Minnesota-based freelance writer.

Act Now!
Don’t put your future on hold. Have a conversation about your goals with a Thrivent Financial representative who can lend valuable direction, specificity and energy to your retirement-savings efforts.