How to Run a Retirement Dress Rehearsal

As time marches on, I can’t help but think of our lives at the end of 2020. We were all in semi-lockdown planning for a bizarre holiday season. While our global timeout had more than its share of drawbacks, it also provided us with a merciful sneak peek of what our retirement could be, and an opportunity to tweak it if we felt we were on the wrong track.

For example, maybe the initial thought of a wide-open schedule sounded dreamy but turned out to be a daily fall-asleep-in-your-soup snoozefest in practice. Perhaps that comforting vision you had of spending more time with family playing board games instead resembled a grizzly scene from Mortal Kombat. For better or worse, it’s clear that deciding what you want your daily life to be like when you’re no longer in the daily grind is just as important as deciding how you’ll allocate your money.

While last year was a forced retirement dress rehearsal, you don’t need a modern plague to have a six-month test run. In fact, it’s something I encourage all of my clients to do. Here are the simple steps I give them to run their own retirement dress rehearsals:  

What is a Retirement Dress Rehearsal?

I’m sure you’re familiar with what a “dress rehearsal” is, so I’ll spare you that explanation. A retirement dress rehearsal is simply living as you hope to in retirement for a specific period of time, I recommend at least two months. Ideally, six. Now, I understand taking a six-month sabbatical from work may not be in the cards, and that’s fine. Just try to live your dream retirement within the hours you have available.

Top 100 Bucket List

The first task is to write your bucket list. List at least 100 things that you’d like to do once you retire. Then, once you begin your retirement dress rehearsal, start checking some of the items off the list.

I’ve had some clients think this means to go full throttle and try to accomplish everything on their list in 100 days. But unless you’re only going to be retired for 100 days, it’s unnecessary. So first, keep your pants on. Second, remember the goal isn’t to cross everything off your bucket list at a breakneck speed. Instead, you’re trying out a few things now to see if they’ll sustain you throughout your entire retired life, not just the first month of it. Your retirement bucket list should be varied and complex. You’ll likely have years, maybe decades, in retirement, so get creative, otherwise, you’ll end up sitting in front of the tube watching soaps every day, which is probably not on your bucket list. You need to plan as intentionally for how you’ll manage your retirement time as to how you’ll manage your retirement finances.

One caveat: if relocating in retirement is on your bucket list be sure to try this during your dress rehearsal! Many of my clients plan to move in retirement. Many want to relocate to somewhere with a more predictable climate others want to move closer to their children or friends. If this is your plan, temporarily move to where you want to live for the duration of your dress rehearsal. This will help give a better idea of how you will spend time and money in your new home. Crucial for an accurate dress rehearsal!

Retirement Dating

Next, give “retirement dating” a try. To clarify, I don’t mean hop on eharmony. What I mean is prioritize important relationships and give them the time and attention and most importantly SPACE they deserve. Be thoughtful in your togetherness.

The pandemic presented a unique opportunity for families and couples to rekindle relationships that were often put on the backburner due to everyday demands. On the flip side, it amplified problems between some couples as they were forced to confront compatibility issues and restrain themselves from chucking the other out the window. Divorce rates skyrocketed amid Covid-19, with 31% of couples admitting the lockdown caused irreparable harm to their relationships. Retirement is very similar. In fact, one of my clients always says that retirement is “twice the husband and half the money.” This is actually one of the most common retirement worries I hear.

During your dress rehearsal, be intentional with the time you spend with your spouse. Though you’ll still have to dedicate hours of the day to work, treat your free time as your retirement time. Take the time you have available and start knocking some items of the bucket list – but do them individually. Start your new hobby in a different part of the house, or even by leaving the house! That way, instead of the two of you accidentally being in the same room an entire evening, you’ll bring something to the table for your bonding time. You’ll actually have to tell your spouse how you spent your time or how your day went because they didn’t see how you spent every waking minute.

Retired or not, it’s important to have your own time to do your own thing. You don’t want your spouse to be living under the pressure of filling YOUR time.

Know Your Budget

A huge reason to do the retirement dress rehearsal is to see if you can live how you want in retirement within your monthly budget.

During the lockdown, a common thought was “we might be able to get by with less money we think.” You probably noticed that besides food, housing, and utility costs, there weren’t really opportunities to spend money, since everything was closed, and we couldn’t go anywhere. Now, hopefully, your retirement won’t be like lockdown, but there are some similarities.

For example, during the lockdown, your transportation costs likely plummeted as did your wardrobe needs. And, unless you went hog wild on Doordash every day — you likely saved quite a bit of money. Retirement has this in common. You won’t commute to work. You’ll probably need to refresh your wardrobe less, and you’ll mostly be eating lunch at home. With these expenses vanishing, you’ll be able to reallocate the funds.

So for your retirement dress rehearsal, keep track of your budget each month. How often do you intend to dine out? What about vacationing? Will any of your new hobbies require a monthly stipend? Now, subtract the work-related expenses that will vanish in retirement. Are you still in the black? If not, it might be time to rethink your strategy.

Aside: The pandemic also highlighted more than ever the importance of having a cash cushion for emergencies. When an unforeseen expense occurs, like a health condition, it’s best to have three to six months’ worth of expenses in a liquid account. This is no different in retirement. You need to be prepared for the unexpected.

Weathering All Storms

There’s an old saying that a smooth sea has never made a skilled sailor. I love analogies, so let’s take this further. if the market conditions are the sea, and you are the sailor then your retirement strategy is your ship. And your ship needs to withstand both fair weather and foul. It’s easy to feel confident about your strategy when there’s nothing but blue sky ahead. But what about when there’s a storm brewing?

Back in 2020, market volatility probably made you acutely aware of how market shocks can impact your carefully laid-out plans. It likely also highlighted the importance of managing risk as you get closer to retirement. Luckily, we saw a rapid recovery in the markets — this time — but it’s important to review your portfolio allocation to make sure your risk is aligned with your goals and time horizon.

Regardless of whether you’re living off a 401(k), pension, Social Security, and/or investment income in retirement, you’ll need to weigh your current investment income plus expected future income against your annual expenses. Obviously, you can’t control the economy in your dress rehearsal, but you can run some tests – I highly recommend you work with an experienced professional for this part!

We do just that. We actually put our client’s strategies through various scenarios to ensure they can maintain the lifestyle that they worked for, regardless of what’s going on in the world.

Knowledge is Power

Retirement doesn’t have to be something that causes you sleepless nights. There are methods you can try to help you feel more confident and informed about what your retirement will look like. The retirement dress rehearsal is one of the best methods I know that can help you get an accurate picture of your retirement life and needs. Another method is to work with experienced retirement professionals. People who plan for retirement day in and day out. I always say, “my clients retire once in a lifetime. I retire six to seven times a day.” The best way to start feeling confident about your retirement is simply to start. And as always, call if you need us.

Rowlette and Associates, LLC DBA: South Shore Retirement Services – an affiliated company – is an independent financial services firm offering both insurance and investment services. Investment advisory services are offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Rowlette and Associates, LLC DBA: South Shore Retirement Services not affiliated companies. Investing involves risk, including the potential loss of principal. Any references to protection benefits, safety, security, lifetime income, generally refer to fixed insurance products, never securities or investment products. Insurance and annuity product guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. Our firm is not affiliated with or endorsed by the U.S. Government or any governmental agency. Neither the firm nor its agents or representatives may give tax or legal advice. Individuals should consult with a qualified professional for guidance before making any purchasing decisions. 1259149 – 05/22

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