Financial Issues

Sep 2017


I recently met with a long-time client who is now semi-retired. They had a variety of issues that I thought I would share with you. These issues come up frequently at client meetings, particularly, with those who are newly retired. After all, when someone has worked their entire adult life, things look differently when they retire.

Their first issue dealt with their home. As they said, the traditional view is that when you retire you downsize into a smaller, less expensive home. They, on the other hand, want to know if it would be stupid to do the exact opposite and that is to buy a house that was actually bigger and more expensive than their current home. I first told them there’s absolutely nothing stupid about what they want to do. I explained that the old rules regarding retirement are mostly irrelevant today. Remember, some of these rules on retirement were written over 75 years ago when it was thought that once you hit your mid-60’s all you needed to do was get ready to die. I asked the client whether the new home would increase the quality of their life and they assured me that it would. Therefore, I looked at it as purely a financial issue. In other words, can they afford the new home? After reviewing the numbers and doing a variety of calculations, I told the clients that from a financial standpoint they could proceed and buy the new home.

For those of you in retirement, don’t get caught up in what you think the rules of retirement are, or what others say you should do. In reality, retirement truly is a brand new concept in the history of mankind and the key is to always look at your individual situation and decide what works for you, not what your best friend or your neighbor is doing.

The second issue that they had dealt with was life insurance. They each had a couple of term life insurance policies that were expiring as well as a whole life policy. As they said, they know they don’t need any life insurance and have no problem letting the term policies expire. On the other hand with the whole life policy, even though they don’t need the life insurance, they said they felt more comfortable to keep that policy in place. Their question to me was, should they?

As I told them, unlike the first question which was a financial issue, this is not a financial question. After all, they can afford to keep the policy in place if they choose, or they can cancel the policy. Therefore, this is a quality of life question. As far as I’m concerned, having money and resources is to increase your comfort and quality of life. If having that life insurance policy gives them additional comfort and quality of life, then why not; isn’t that the purpose of money? Unfortunately, for those who do not have resources, the financial issues have to take precedence over the quality of life issues. On the other hand, for those with resources, even though finances are always important and must be considered, the quality of life issues can take a more dominant position. Remember, retirement should be the time in your life where you reap the rewards for a lifetime of working. If you don’t take quality of life into consideration when you are retired, my question is what are you waiting for?

Good luck!
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