3 Surprising "Year One" Retirement Trends

June 07, 2018

Most of our clients can probably remember why and when they first called us.

That’s because, even though we recommend you begin working with an advisor 3-5 years before you retire, there are some key moments in life, things many people go through or experience, when a person is most likely to contact an advisor for the first time.

Some of these reasons are:

They’ve reached a savings milestone
They’ve set a goal to retire by a certain date
Their spouse or partner became ill
They’ve inherited money
Their employer offered them a pension buyout
They’re ready to let someone else do the worrying (about their finances)

But besides these milestones—where either urgency or forward thinking (or a combination of the two) are the inspiration—there’s another, perhaps surprising moment in life that prompts people to call us for the first time: The one-year anniversary of their retirement.

So, what’s unique about a one-year retirement anniversary?

Here are 3 occurrences that inspire people to pick up the phone.

They’re not earning enough income.

Remember, retired people are … already retired. So in this scenario, when it comes to their finances and saving, this type of person has usually done a whole bunch of things the right way.

They’ve saved
Maybe they own their house
They’ve hopefully developed a healthy allergy to debt

Excellent happenings all around!

But at the one-year mark of retirement, a lot of people call us with the exact same concern: There’s much less money coming in than going out, and their nest egg is getting smaller by the day.

Here’s why.

A lot of really smart people still retire with the antiquated notion that it’s strictly about achieving a certain savings amount, and making it last.

They had a financial goal, and once they met it, they stopped working. Simple.

Then, after a year, they sat down and calculated what they brought in, what they spent, and then they multiplied it out by say 10 or 20 years.

Sometimes, they feel compelled to call within the hour.

Of course the amount you’ve saved is important. But this isn’t your parents’ retirement.

Today’s retirees need to invest wisely and proactively so that their money continues to generate a level of income that keeps their savings depletion to an absolute minimum. And in the ideal scenario? You save enough over your career, and you invest and protect it in such a way, that you are able to live off the income.

They have no budget.

We receive a lot of one-year retirement anniversary calls from people hit with sticker shock.

While some costs (clothing, for one) typically decline once you stop working, other expenses such as travel, health emergencies, and the pursuit of hobbies, will likely accelerate.

The decision to work with a credentialed, fiduciary advisor who acts as an impartial sounding board can help you identify and correct unsustainable spending habits and develop reasonable budgets almost no matter where you are in the retirement preparation and transition process.

They want help drafting a meaningful Social Security strategy.

It’s not atypical for a person (or couple) a full year into retirement to have absolutely no idea when they should apply for Social Security. The good news is, that if you haven’t applied, we can work with you to figure out a strategy that’s best for you.

You may have heard that if you’ve saved well (and don’t need the income to cover your day-to-day expenses), you should simply wait until age 70 so that you can receive the maximum benefit amount.

But the future of Social Security is far from certain.

It was just announced that for the first time since 1982, and a full three-years earlier than was projected just one year ago ^[1], that the Social Security Administration is going to be forced to dip into its trust fund to cover beneficiary payouts.

If you’ve saved well, the future of your Social Security is anything but guaranteed. Simply, changes to the program may well be coming.

Under certain circumstances, we might recommend that someone who has accumulated ample assets apply as early as possible rather than wait for a larger payout.

It all depends.

And for those people who are truly ready to apply today? There are couple’s strategies and tax considerations that even the most financially savvy retirees find confusing.

Remember, developing an informed approach is important because when it comes to Social Security, there are absolutely no second chances.

Conclusion

Retirement is a lot like a maze: it’s easy to get sidetracked if you don’t have a guide. For questions about financially healthy one-year anniversaries, Social Security, or anything related to retirement or investing, contact us today.

[1] https://www.wsj.com/articles/social-security-expected-to-dip-into-its-reserves-this-year-1528223245

Advisory services offered through Allworth Financial, a Registered Investment Advisor | Disclosures | Privacy Policy

Securities offered through AW Securities, a Registered Broker/Dealer, member FINRA/SIPC. Check the background of this firm on FINRA's BrokerCheck.

HMRN Insurance Agency, LLC license #0D34087

¹Barron’s 2024 Top 100 RIA Firms. Barron's© magazine is a trademark of Dow Jones L.P. The ranking of independent advisory companies is based on assets managed by the firms, growth, technology spending, succession planning, and other metrics.

² Retention Rate Source: Allworth Internal Data, FY 2022

³ The NBRI Circle of Excellence Award is bestowed upon NBRI clients meeting one or both of the following criteria: Total Company score at or above the 75th percentile of the NBRI ClearPath Benchmarking Database and/or improvement of five (5) or more benchmarking percentiles in Total Company score over the previous survey.

⁴ As of 7/1/2024, Allworth Financial, an SEC registered investment adviser and AW Securities, a registered broker/dealer have approximately $22.5 billion in total assets under management and administration.

⁵ InvestmentNews 2020 and 2021 Best Places to Work for Financial Advisers. The ranking reflects survey responses and scores completed by both employers and employees. Employers report their organization’s workplace policies, practices, and demographics. Employees complete a survey designed to measure the employee experience.

⁶ 2021 Value of an Advisor Study / Russel Investments

⁷ Ranked 9th Top Wealth Managers By Growth in Assets in the U.S. from RIA Channel, 2022. RIA Database and RIA Channel are registered trademarks owned by Labworks, LLC.

⁸USA Today Best Financial Advisory Firms 2024. The ranking is based on the growth of the companies’ assets under management (AUM) over the short and long term and the number of recommendations they received from clients and peers.

⁹NBRI Best in Class Ethics 2023. The Best in Class level is bestowed upon clients performing at or above 90 percentile of the NBRI ClearPath Benchmarking Database.

^✢ Scott Hanson, Investment Advisor 2005, 25 most influential people in the financial services industry. The ranking reflects 25 people who Investment Advisor magazine believes have had or will have the greatest influence on the financial services industry.

^✼Pat McClain, InvestmentNews 2014, Invest in Others Community Service Award, presented to an advisor who has made an outstanding impact on a community through managerial contributions to a non-profit organization.

^†Financial Times, FT 300 Top Registered Investment Advisers, June 2019. The ranking reflects six areas of consideration including the company's years in existence, industry certifications of key employees, AUM, asset growth, SEC compliance record and online accessibility and calculates a numeric score for each company.

Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.