Co-Authored by Katy Vermeer
Retirement planning involves a multi-faceted analysis that requires a combination of data gathering, quantitative and qualitative analysis, and discernment. It is an on-going process that offers peace of mind to our clients as their life goals evolve.
As people approach their retirement years the number one question advisors are often asked is, “Do I have enough?” While the internet offers a host of formulas, calculators, and rules of thumb to answer this question, such resources do not take into consideration a person’s evolving circumstances, goals, and needs, nor do they encourage the individual to evaluate their spending from a values-based perspective.
At Carlson Capital Management, we understand that retirement modeling is both quantitative and qualitative in nature, requires review and adjustments on an ongoing basis, and must be customized to each individual and family. Furthermore, we encourage clients to reflect on their values and align their spending accordingly.
On the quantitative side, CCM uses robust software that allows us to input a vast amount of financial information and then analyze and stress-test the outputs. This type of analysis helps us understand the impact of additional saving, adjustments in spending, and volatility of the markets, to name a few. We are then able to make recommendations that further advance an individual’s likelihood of success in ensuring that accumulated assets can sustain retirement spending.
The qualitative component of retirement planning emerges from in-depth conversations between the individual and the advisor and may include a variety of topics such as current and future spending goals, evolving health issues, family support needs, charitable intentions, gifting and estate planning implications, etc. These conversations are ongoing and inform adjustments to the existing model or additional scenarios to consider.
However, the most important aspect of retirement planning isn’t found in analyzing the data or running additional scenarios. You can’t find the answer in formulas, and there isn’t a rule of thumb to guide you. At the core of retirement planning is reflecting on the journey you took in accumulating your assets and discerning the people, experiences and things in life that bring you the most joy and fulfillment so that your spending is aligned with what matters most to you.
The quantitative and qualitative components of retirement planning are paramount in their ability to provide the reassurance necessary to make the transition into retirement and answer the common question of, “Do I have enough?” However, it is the discernment of what matters most to you during your retirement years, then aligning spending with such values, that contribute to help make those years meaningful, intentional, and joyful.