The Importance of Optionality in Retirement
If you’re nearing retirement or already retired, it’s hard to overstate the importance of having options. During your working life, having choices is nice to have, but in retirement, having the ability to choose is a must-have.
Preparing Financially for More Options at Retirement
If you want to enjoy pretty flowers in your garden, you have to do some work in the spring preparing and planting. The same principle holds true for preparing financially for retirement. If you want to enjoy retirement without worrying endlessly about money, you need to take steps to plan for the journey ahead.
In order to reach the “readiness stage” you have to prepare by saving and investing adequately during your working life. Without a pool of capital to help offset lifestyle expenses in retirement, your choices become much more limited.
Building Financial Flexibility Before Retirement
Some investors enter retirement with little or no margin of error. That’s the opposite of optionality. In your financial life, many things don’t work out exactly as planned. You don’t want to be in a situation where every outcome has to be perfect.
If you can prepare for a range of possibilities this helps tamp down your stress level from worrying about every financial decision. You will likely make mistakes along the way and there will also sometimes be setbacks to your plans.
When you lack options or exhibit impatience in your financial life, you may be tempted to take outsized risks in the hope of improving your investment returns. That can sometimes create even more tension if these risks don’t actually improve your overall financial life.
Sustainable Investment Strategies for Retirement Options
It’s not just a question about achieving high investment returns, but a question of the highest return that is sustainable for the long-term.
The most important variables that determine your resilience in retirement are how much you invest and for how long. Just like the flowers in your garden, it’s difficult to expect nice blooms if you’ve missed the best time to plant for the season.
How Optionality Creates Better Retirement Decisions
Optionality means you can follow your financial plan and assume risks that are appropriate for your circumstances and goals. You are the driver when you have prepared for different possibilities.
If you haven’t arranged your financial life well, eventually your decisions will be dictated by your circumstances. This could mean “have to” instead of “want to” decisions.
Planning Ahead to Create More Options at Retirement
In the 5-10 years before retirement, begin fine-tuning your long-term priorities. Make sure that you act on your priorities so that when you eventually stop working, you can have choices and options. Start there. Ready for a real conversation?
Disclosure
Apollon Wealth Management, LLC dba J.E. Wilson (Apollon) is an investment advisor registered with the SEC. This document is intended for the exclusive use of clients or prospective clients of Apollon. Any dissemination or distribution is strictly prohibited. Information provided in this document is for informational and/or educational purposes only and is not, in any way, to be considered investment advice nor a recommendation of any investment product or service. Investing involves risk, and while remaining invested can support long-term goals, it does not guarantee a profit or protect against losses. Advice may only be provided after entering into an engagement agreement and providing Apollon with all requested background and account information. Please visit our website https://apollonwealthmanagement.com for other important disclosures.