Couple on dock looking at ocean Retirement

Retirement Planning: Money Can Buy a Retirement

No, money can’t buy happiness. But a good retirement planning strategy will keep a roof over your head in your golden years.

As the old adage goes, “Money can’t buy happiness.” And it’s true! Appreciating life’s little things and nature needn’t cost you the equivalent of an original Monet. Family, friends, and nature are all free! But the thing is, money is pretty much required to retire, so if you’d be happier retiring than working, we guess there should be an asterisk by the old adage.

Here are four quick tips to help you think about retiring happily … errr… with money.

Have Rational Social Security Expectations

The average retired Social Security beneficiary today receives $14,690 in annual income1. And that is before taxes are taken out2. Certainly, the average is only the average and many workers will receive more (and some less). But chances are, if you want to travel, visit grandkids, eat out, and—arguably most significantly—not be a burden on your family, you will need to supplement this somehow, some way.

While we believe this legislative entitlement won’t be eliminated any time soon, there is little reason to think it won’t be revised in some form or fashion. It just was revised by late October’s Bipartisan Budget Act and it has been revised under various historical administrations. Expect change.

When to Start Retirement Planning? Try Now

If you think you’ll need money to retire comfortably, the time to begin a retirement planning strategy is always right now. Or, if you prefer we create urgency, RIGHT NOW!!!! Point being, the single greatest power in investing is compound growth over time. The over time is critical. Investing in any asset—stocks, bonds or other securities—is not a get-rich-quick scheme. It is a get-a-good-retirement-gradually process.

Watch Your Spending

This may go without saying in retirement, but even before retirement you should watch what you spend. We’re not here to dispense advice about whether or not you should drink that $5 mocha latte (and we are certainly not about to weigh in on The Great Red Cup Debate of 2015), but we are here to say that you should have an accurate tally of what you are spending and on what. The “on what” is more important than you might think.

In the event market conditions go against you, you should have a game plan for where you can trim back. It won’t be fun. It won’t be easy. It may not make you happy in the short run. But, and you’re going to have to trust us on this one, you’ll be happier for longer when those market conditions turn.

Make Sure Your Retirement Planning Investments Are Liquid

Liquidity, in investing terminology, means how fast you can turn an investment into cash without greatly harming the price. A house, for example, is incredibly illiquid. For one, settlement times are long and involved. But also, if you really want to find a buyer today, depending on your location, you may have to slash the home’s price dramatically. Note that stocks and Treasury bonds are generally extremely liquid—hence why many professional managers employ them in retirement investing strategies.

However, a word of caution: Not all bonds are liquid. Many, including some municipal bonds, are rarely traded. Other illiquid assets include partnerships, non-traded Real Estate Investment Trusts, deferred annuities and the like. (Note: We didn’t include immediate or annuitized annuities, as they are totally illiquid—you don’t own the assets, the insurer does.)

These are four basic tips on how to actually help provide money throughout your retirement. We can’t tell you whether that retirement will bring you happiness or not—that’s up to you. But at least in our opinion, worrying about money is no way to spend your golden years. Proper retirement planning can provide peace of mind.