Plan for go-go, slow-go, no-go years

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Meeting your income needs is the goal of retirement planning. What those income needs are vary by retiree — that’s why they call it personal finance. But as you transition through the different retirement stages, these needs are likely to change.

While I don’t like putting people in boxes, I do like categorizing the stages of retirement as the go-go, the slow-go, and the no-go years. That’s hardly original; Michael Stein discussed these stages in his 1998 book, “The Prosperous Retirement: Guide to the New Reality.”

The point is what you spend money on in retirement will change as you age. Travel, hobbies and sports are likely to be part of the go-go years and taper off as you transition into the slow-go years. Health care is likely to ramp up through these transitions.

You need a financial plan that is flexible enough to adjust to reflect these changes. Working with a trusted financial adviser can help. That’s what really got me started on this topic.

Hire a professional

I read a recent study by the Bankers Life Center for a Secure Retirement that just 41 percent of middle-income baby boomers have worked with a financial professional. The study defines middle-income Americans as having an annual household income between $25,000 and $100,000. This group of boomers between the ages of 50 to 68 at the time of the study were not receiving Medicaid benefits.

Part of the problem is that a lot of middle-income earners don’t have much in the way of retirement savings. You don’t need investment management advice when you don’t have investments to manage. That said, financial planning is so much more than investment management. It also encompasses cash flow, budgeting, taxes, estate planning, insurance, and retirement planning.

Retirees can benefit from financial planning even without a large nest egg by looking at the whole picture and doing what I like to call a “constrained optimization” to get the most out of living in retirement.

Do you work with a financial professional in retirement?

Follow me on Twitter: @drdonsays