Can You Still Build Wealth In Retirement?

Financial planning is fluid. It moves, contours, and evolves as you walk through life. Your plan in your 20s will be fundamentally different than in your 50s. Everything from your goals, priorities, and vision for success will change throughout your life, but one element should remain constant—your engagement. 

Active engagement in your financial plan will help you align your money with your goals, values, and priorities—this engagement becomes even more prevalent in retirement. Retirement represents a significant life transition, both personally and financially. It’s important to remain active in your financial plan throughout retirement to help work towards bringing your goals and lifestyle to fruition, and building wealth plays a significant role.

Your wealth-building journey doesn’t end in retirement. Here’s how you can work to further your finances in your golden years. 

Stay invested

Investing is a wealth-building agent normally discussed on your journey to retirement, but what happens when you get there? Many people think that your investment journey comes to a halt, but that’s far from the truth. 

There are several reasons to remain invested throughout retirement, such as outpacing inflation, funding new goals, and accounting for lifestyle changes. Inflation is an important metric for retirees because few income channels take it into account. While Social Security may include an annual cost of living adjustment, your 401(k), IRA, and pension plans don’t have that luxury. 

Your risk and security balance may shift, but it shouldn’t merely fall to one side or the other. Many people tip the scale in favor of security, but we find that leads to an overly conservative portfolio. How can you stay invested in retirement while keeping your changing risk tolerance and income needs in mind?

At Legacy Wealth Advisors, we talk about this in terms of a “retirement red zone”. In the 5-10 years leading up to and after retirement, we look at applying a more conservative approach to your investments to protect your assets and cash flow. We feel This strategy helps mitigate the sequence of returns risk, which seeks to protect assets from negative returns early on in retirement. 

But once you are a decade or so into your golden years, it may be prudent to apply more risk. Of course, what’s right for you will depend on your retirement goals, risk tolerance, time horizon, income channels, and lifestyle factors. 

Re-evaluate your investment goals

Your investment strategy may change in retirement, but it doesn’t stop. Ask yourself,

• How have your investment goals shifted since entering retirement?
• What does your risk tolerance look like and how can you make intentional updates to your investments to best reflect it?
• How can your investments further your lifestyle needs/wants? (leaving an inheritance, funding a move or trip, providing more flexibility, etc.)

Your needs will change as you move through retirement and so should your investment strategy. Being present and engaged in your plan will help you best align your investments with your other goals. 

Don’t hang up your hat

Every person’s vision for retirement is different. While a traditional view might be spending your time on a beach relaxing as the waves crash at your feet, other people might have a radically different outlook. 

For many, that includes working. According to a study by United Income, 20% of people 65 and older were working or looking for work. Other studies suggest that working by choice in retirement can boost overall life satisfaction. What does this mean for you? You might want to start your own business, embark on a passion project, work part-time at a local shop, or take classes to learn a new skill. 

Retirement is an opportunity for you to engage in work you find meaningful. Your next adventure doesn’t have to be in the same or adjacent field, just something that you are excited to pursue. 

This venture won’t only be positive for your mental state, but it can also significantly impact your balance sheet. If you think that you couldn’t possibly start a new business in retirement, let’s see if these famous entrepreneurs can change your mind. 

The founder of GEICO Leo Goodwin started the company at 50 after years in the insurance business. Harland David Sanders, a.k.a, Colonel Sanders, founder of Kentucky Fried Chicken didn’t franchise until 62. These are just a couple of examples of people who jumped on their landmark business plan later in life. 

No matter what you decide to do, making a plan for your time can help you find fulfillment and purpose in your golden years. It can also further your financial goals and give you the flexibility to use your money more freely. 

Prioritize your lifestyle

Building wealth in retirement can facilitate the lifestyle you have been dreaming about.

You may want some extra money to take your dream vacation, sell your house and move closer to your extended family, help contribute to your grandchild’s education, give more to charity, etc. 

Building wealth in retirement can help further your vision and put more money toward the people, places, and things that matter most to you.

Think about your estate

Building an estate plan that works for you is an important part of retirement planning. As you continue to accumulate wealth, you may realize that you need a more sophisticated estate planning strategy. Ask yourself,

• Do you want to leave your children an inheritance?
• Is it important that some of your estate be donated to charity?
• How can your wealth-building journey help promote those goals?

Building wealth in retirement can help you find and reap the rewards of financial independence. We love working with clients to help them coordinate their finances with their goals, dreams, values, and vision for the future. 

Are you ready to continue your wealth-building journey into your golden years? Schedule a 15-minute call with our team today to learn more. 

 Note from the author: When we publish our blogs we attempt to use the most current information. Now that this blog is a year or more old, we want to advise you that some of this information may be dated, although we believe that the base of the blog still contains lots of valuable information. If you ever have questions about the contents of our blog, please reach out to us at info@legacy-wealth.com.

General disclaimer: Advisory services are offered through Legacy Wealth Advisors, LLC dba Legacy Wealth Advisors, an Investment Advisor in the State of Michigan. The information contained herein should in no way be construed or interpreted as a solicitation to sell or offer to sell advisory services to any residents of any State other than the State of Michigan or where otherwise legally permitted. 

All content is for information purposes only. It is not intended to provide any tax or legal advice or provide the basis for any financial decisions. Nor is it intended to be a projection of current or future performance or indication of future results. Moreover, this material has been derived from sources believed to be reliable but is not guaranteed as to accuracy and completeness and does not purport to be a complete analysis of the materials discussed. Legacy Wealth Advisors does not offer tax planning or legal services but may provide references to tax services or legal providers. Legacy Wealth Advisors may also work with your attorney or independent tax or legal counsel. Please consult a qualified professional for assistance with these matters.