Abraham Maslow in his 1943 paper “A Theory of Human Motivation” in Psychological Review asserted that humans have a hierarchy of needs. Maslow’s theory was fully expressed in his 1954 book Motivation and Personality. So what are your needs? Maslow’s work moved through the thinking that people have basic needs and that a person moves to a level of self-actualization or fulfillment; referred to as Physiological needs, Safety needs, Love and belonging, Esteem and Self-actualization. So to move through the life chapter called “Retirement” one should begin thinking and planning much before that day arrives, about your basic needs and what life needs to look like to end well or achieve self-actualization. Consider these seven questions:
Do I know how much I have in income producing assets and the amount I will receive from my pension/ annuity? People who plan well, know the amount it takes to meet your basic living needs and what amount it takes to live well. I suggest today you take an inventory or your financial net worth. How much money do I have that can be used to produce income and how much will my pension or annuity be from my employer. In the year prior to your retirement, if not sooner, begin adjusting how much you live on, to match what your pension will be when you retire. Discipline yourself to save the difference in a cash account. Do I know how much I need to live the lifestyle I desire? Am I willing to live on less? Am I willing to work longer to have the lifestyle?
What resources are available to me if retirement were to be now? Consider that you may not be financially ready and that you may not have enough time to be self-supporting. Explore the many services that social programs afford you.
What intentional plans do I have in place to minimize income taxes? Under current tax rules the money you take out of your retirement accounts, the TSP, 401k, IRA’s, are included as income for federal. Some states offer an exemption on the income from a federal pension, but many states are viewing the pension as a source of revenue under a state income tax. Take action years ahead of retirement to develop a plan to minimize your taxes in retirement.
Have I taken a serious look at my health? Consider that you may be riding solo in retirement for many years. Do I have a plan in place for giving or receiving long term caregiving? What systems or authority / powers have I granted to someone else to make it efficient to care for me? The mickey Mantle line is true, “If I knew I was going to live this long I would have taken better care of myself”. A basic need of safety covers a lot of ground these days, including your safety from identity theft.
How do I want my estate to be distributed and what plan do I have in place? Most people don’t die dead even. They either have debts that can’t be met or they have a surplus to distribute. Seek legal advice in either scenario. Consider how your state handles estate distributions and plan using the appropriate devices. Many consider the advantage of a will, living trust, health care proxy, health care powers and advance directives.
Knowing there are likely fewer years ahead than behind me, how do I want to fill my retirement days? Being a child of the 60’s the image was a shuffleboard tournament as a big day. The new 70 looks more like 40. Am I willing to pour my life into someone else to help them live a more fulfilled life? Am I willing to “pay it” forward to have a more self-fulfilled life?
What plans have I developed to make my funeral and interment an uneventful task for my appointed representative? Particularly if you are solo in retirement, don’t live so close to vest with your plans. Tell your children or close friends, in advance, where to find the instruction manual when you are gone.
Chip Hollingsworth, founder of the Federal Employee Benefits Assistance Agency, LLC has been successful in providing sound and safe financial services and planning for over 30 years. Because he understands the unique and complicated federal employees’ benefit package, Chip stands ready to help assist individuals, when needed, in finding a plan that will fill any potential gaps.