How Rebalancing Your “Life Portfolio” Can Help You to Achieve Financial Success After 60
There is no part of life that can be experienced in a vacuum. Each decision you make impacts other areas of your life. I know, for instance, that if I have a glass of wine, it will trigger a migraine, and I will be wiped out for three days which impacts my ability to exercise, play, and carry on relationships.
As you embrace the fall season of your life in all its’ splendor, you want to look at two types of portfolios – life and financial. They should work together in harmony in order to truly flourish in your unique version of prosperity.
There are the four “Ps” of the life portfolio and the four “Ls” of the financial portfolio that woven together create an intricate tapestry of your retirement years.
Live Life Well
We all have goals that we want to achieve while we’re still capable, but we need to plan for them, so the unexpected surprises are less in number and low in intensity. Here come the four Ps you need to consider:
What meaningful activities or pursuits fill your days? What areas of your life do you have an expertise in or truly enjoy that you want to cultivate? Time is precious, use it wisely.
Stay pro-active with your health. My husband and I like to bike, boat, and hike together. We also have our individual activities to focus on staying healthy. I love to cook and create healthy meals for ourselves and guests.
Yes, meniscus tears happen and cancer has reared its head, but we are grateful for our health everyday and do the best we can to steward the bodies we have been given.
Who do you want to hang out with? Isolation in our aging demographic is growing at a rampant rate. Get intentional about surrounding yourself with people that are important to you, or those who will keep you engaged and thriving.
Maybe seek out people or groups that give you a new perspective or challenge you in your thinking.
Where do you want to live and how will that change as you age? If you want to travel, what type of experiences or places will nurture your soul, not simply provide Facebook fodder?
Look at your community and where you might want to get involved using all that wisdom and experience you have accumulated over your lifetime.
The Financial Side
Make sure your financial portfolio is set to optimize your life portfolio! You need to discern and direct your financial tools to maximize sustainability of your financial resources.
There are four areas to consider:
You want cash that is easily accessible for emergencies or opportunities, or to supplement income from other sources in the event of a market correction. How much? It depends.
There are a variety of factors to look at. How much do you have coming in from Social Security or pensions? Does this cover your fixed expenses? Do you have upcoming one-time expenditures (i.e., a car purchase or vacation)?
There are financial vehicles best positioned to provide you with this liquidity. Start with vanilla flavored savings accounts, money markets, or laddered CDs. Shop around for a good interest rate.
Your spending patterns will change as you shift gears in life. You should anticipate long-term care expenses down the road. You will have variable expenses (such as travel) and fixed expenses (mortgage, Medicare supplements, etc.).
Investment accounts, retirement accounts, and new opportunities through the “gig economy” (Air B&B, Uber, Task Rabbit) can provide you with income streams that can be creatively managed for tax-efficiencies. Make sure to incorporate inflation as you look at the go-go, slow go, and no-go years.
With the help of a healthy lifestyle and following the medical advances, you can anticipate a long Indian summer of life. Social Security, pensions, and annuities are three of the tools to use optimally to hedge against a long life and to guarantee that you won’t outlive an income.
There are many considerations to assess before turning on these spigots of income. Is it just income for yourself, or is there a spouse involved? Is there an age difference? When is the best time to start taking these income streams? This is a good time to bring in a competent, fiduciary planner – not a sales person.
Financial tools positioned to optimize what you want to leave to heirs would include Roth IRAs, real-estate, and brokerage accounts. The Roth IRAs pass on to your beneficiaries tax-free and can be set up for “stretch” distributions.
Real estate and brokerage accounts currently get a “step-up” in cost basis, making them tax efficient for legacy purposes. Life insurance proceeds also pass on to beneficiaries’ income tax-free.
However, depending on the size of your estate, if you personally own the policy, proceeds may be subject to federal and state estate taxes.
Create a Life of Meaning
The only thing you want in a vacuum is dirt! You have the opportunity to create a life of meaning given the constructs of whatever financial situation you are in. Create an awareness of what is working and what isn’t, then start taking the steps towards where you want to be.
You may want to seek out a retirement life coach to help you rebalance your life portfolio or a financial coach to help you optimize the financial portfolio.
My gift to you is a copy of my financial affirmations – one for yourself and one for a friend!
What are your life goals, interests, and pursuits? How do you manage them? What tools do you use to optimize your financial portfolio? Your experience is valuable to the women in our community, so please share it below!