Successfully "Land" Your Retirement
After its mission launch from Cape Canaveral Space Force Station on July 30, 2020, the Perseverance rover traveled a total of 293 million miles and successfully landed inside Mars’ Jezero Crater on February 18, 2021.1 The rover’s mission was to collect samples over the subsequent two years to better understand the planet’s past climate and geology. Among the interesting findings was evidence of ancient lake sediments that may indicate past microbial life on Mars.2 NASA’s total budgeted price tag for the mission was $2.7 billion,3 most of which was dedicated to the spacecraft and equipment.
Ahead of the landing, Thomas Zurbuchen, associate administrator for the Science Mission Directorate at NASA Headquarters, said that the Perseverance’s landing was “the most challenging Martian terrain ever targeted for a landing.”4 In the past, only about 50% of all landing attempts on Mars had been successful, so Perseverance’s landing was certainly an accomplishment for the team behind the mission.
Aim for an attainable target
So, how does this discussion about the Perseverance rover tie into retirement planning? Similar to the rover when it approached Mars, you want to accomplish a smooth and successful financial landing when it’s time to retire. In our view, it’s one of the hardest exercises for retirement planning, but gathering your best guesses on how much you’ll likely spend in retirement will provide you with a critical direction toward an intended destination. There are many calculators and methods, such as the 4% withdrawal principle,5 that will illustrate how much in portfolio assets you may need to aim for based on your lifestyle target. We believe having context and insight on your spending provides necessary clarity in so many retirement planning decisions, such as how much you should keep in cash, what is a prudent investment allocation and what’s your required level of portfolio assets to sustain your income stream.
Understand the factors that could change
The economic climate in which you end up retiring could have an impact on your landing, depending on your prior preparation and your unique situation. For example, in an economic downturn, many people may find they need to keep working for a few more years, while others may realize that a job loss—especially if accompanied by an attractive severance package—could be a welcoming entry into retirement. Additionally, retiring in the midst of stock market peaks could mean resetting your expectations on spending, especially in the earlier years, as your investment returns may lag to a certain degree.
And let’s not forget the eroding impact inflation can have on your finances. Following many years of moderate inflation and ultra-low interest rates, the period coming out of COVID-19 saw a sharp spike in inflation and a dramatic rise in interest rates. Debt levels increased as the price of goods and services jumped significantly, while soaring interest rates led to higher borrowing costs (e.g., credit card and mortgage payments). Retirees and those nearing retirement are typically more vulnerable to cash flow challenges in such harsh economic conditions. Keeping debt levels low, having sufficient cash on hand and maintaining a sensible balance of investments in different types of retirement accounts may all help ease the financial pressure leading into retirement.
Plan ahead for spending your time
Many people understandably and correctly invest considerable time and energy into making sure their finances are in proper order as they prepare for retirement.
While these financial exercises are crucial, we believe it’s also incredibly important to create some framework for how you plan to spend not only your money but also your time in retirement. This step may include asking questions such as: Where will I live? What will my time in retirement look like with my grandkids? How much would I like to travel? What hobbies might I pursue? How could I volunteer my time and expertise to help others? What do I envision for my legacy? While it’s not rocket science (unlike the Perseverance rover!), it’s still vital to have a viable game plan for how to approach your retirement years so you can live with meaning, purpose and satisfaction.
Give yourself time to adjust
The Perseverance rover entered the Martian atmosphere at a speed of more than 12,000 miles per hour; however, it landed on the planet’s surface at roughly the pace of human walking speed.6 For many people leading right up until the moment of retirement, it may seem a bit chaotic and too fast to handle. We believe knowing how to adjust properly and in the right way is such an important facet of going into retirement. The answer isn’t the same for every person, but it may mean scaling down over a period of months or even years if your job allows. And this could include steps as simple as getting adequate exercise and sleep. Managing your stress levels when many important decisions are being made during this stretch of time—such as pension elections, health insurance selection and investment adjustments—can be crucial for a better, more rewarding outcome.
We think the Perseverance landing and mission provide some surprisingly relevant lessons for those who are contemplating a transition into retirement in the near future. As you enter an unfamiliar and changing environment like retirement, keep in mind some of these foundational principles while preparing for the journey into this next phase of life—a phase that can bring much enjoyment and fulfillment for many people. It takes good planning, careful analysis and, yes, some perseverance!
Feel free to reach out to your Corient Wealth Advisor, who can help keep you on a favorable path toward a comfortable and fulfilling retirement.
1 https://www.nasa.gov/press-release/touchdown-nasas-mars-perseverance-rover-safely-lands-on-red-planet
2 https://www.space.com/mars-perseverance-rover-radar-imager-ancient-lake
3 https://www.space.com/mars-rover-perseverance-landing-explained
4 https://www.jpl.nasa.gov/news/nasas-next-mars-rover-is-ready-for-the-most-precise-landing-yet
5 https://www.forbes.com/advisor/retirement/four-percent-rule-retirement/
6 https://www.reuters.com/article/uk-space-exploration-mars-idUSKBN2AE0BQ
ABOUT THE AUTHOR
Chase Mouchet, CFP, CIMA
Chase is a Partner, Wealth Advisor in our Atlanta office. He joined legacy firm Brightworth team in 2015 as a financial planner, having previously worked at two independent financial planning firms. He is passionate about helping clients—particularly those nearing or in retirement—simplify their financial lives and maximize the impact of their wealth in areas such as charitable giving. He has been featured in Money Magazine’s Money Makeover and published in the Atlanta Journal-Constitution, the Dallas Morning News and Kiplinger. He is a member of the Georgia Planned Giving Council and the Children’s Healthcare of Atlanta Legacy Advisors. Chase received his BBA in Finance and BSFCS in Financial Planning from the University of Georgia and serves on the alumni board of the UGA Financial Planning program. Chase and his wife, Kate, live in Atlanta with their two children and are active members of their church. He enjoys spending time with his family, activities on the lake and cheering on the Georgia Bulldogs.
