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The 'First 100 Days' of Retirement: A Financial Guide for the Transition

David Findlow |
Categories
Retirement
Investments
Finance
Tax Planning

You spend 40 years saving for retirement. You have a plan, you've run the numbers, and you've finally hit your goal. You walk out of the office for the last time, and on Monday morning, you wake up... and the paycheck is gone. This is the financial and emotional shock of the "retirement transition". We spend all our time planning for retirement, but very little time planning the act of retiring. The first 100 days are a critical period where you shift from a "saving" mindset to a "spending" mindset. This transition can be jarring.

Here is a financial guide for those first 100 days.

1. Don't Make Any 'Big' Decisions Do not buy the RV. Do not sell the house. Do not buy the boat. Do not move to another state. Not yet. Your first three months are a "cooling off" period. You need to settle into your new rhythm before you make a major financial decision that's based on a "vacation" mindset.

2. Open Your "Retirement Paycheck" Account This is a powerful psychological trick. You are used to a paycheck. So, create one. Set up a separate bank account (a simple checking account). Calculate your monthly "spend" from your financial plan. Set up an automatic transfer from your investment portfolio (your IRA, your brokerage) into this new checking account. This account is your new "paycheck." It's the only money you "see" and "touch". This stops you from the terrifying feeling of looking at your entire nest egg and feeling guilty every time you buy groceries.

3. Finalize Your Cash & Tax Plan Your "first 100 days" is when you put your withdrawal plan into action. You and your advisor should be confirming:

  • The "Cash" Bucket: Do you have 1-2 years of living expenses in cash (HYSAs, money markets) so you are never forced to sell your stocks during a market downturn?
  • The Tax Plan: Where is your "paycheck" coming from? Are you withdrawing from your 401(k)? Your brokerage account? Are you doing Roth conversions? This is the month to finalize your tax strategy for Year 1.

4. Review Your New (and Old) Budget Your "work" budget is dead. Your "retirement" budget is born.

  • What's Gone? Commuting costs, work lunches, dry cleaning.
  • What's New? Travel, hobbies, lunches with friends, and—the big one—healthcare.

Your first 100 days are for "test driving" this new budget. Track your spending. You may be shocked to find you're spending more on food and hobbies, or less on gas than you thought. Adjust the plan.

The transition to retirement is a journey, not an event. Be patient with yourself. The key is to have a plan for the process, not just the destination.

For those who have retired, what was the biggest financial surprise in your first 100 days? We'd love to hear your story.

Schedule a Consultation These are general strategies and may not be right for your specific situation. If you'd like to discuss how these concepts apply to your financial plan, please feel free to schedule a complimentary call: Click here to schedule