Friday, July 19, 2024

Wealth Management Expert D. Paterson Cope Offers Up a Novel Idea for New Retirees: Test Drive Your Retirement Beforehand

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Rachel Knox
Rachel Knox
Rachel Knox graduated from Columbia University in 2005. Rachel grew up in Canada but moved to the US after completing her school. Rachel has written for several major publications including Buzz Feed and the Huffington Post. Rachel is a community reporter, she also covers economy, business and entrepreneurial news and issues.

You may think you are ready to retire, but do you know for sure? This is a question that every person who’s approaching retirement should ask themselves, according to wealth management expert D. Paterson Cope.

That’s because thinking you’re ready to retire and actually knowing you’re ready to do so are two very different things. If you incorrectly take the retirement leap before you’re actually prepared for it, you could find yourself in a disastrous situation.

A great way to figure out whether you’re ready is to take your retirement plans for a test drive. Here’s how.

What Does a Retirement Test Drive Entail?

A retirement test drive isn’t a full-fledged financial plan for your retirement years. While a detailed plan and budget are essential for any retirement, your test drive won’t get down to these nitty gritty details just yet.

Instead, it’ll involve some combination of visualizing, planning and then adjusting based on a number of factors.

You’ll start by considering how you realistically would want to live after you’re no longer working on a full-time basis. This visualization likely will start way before you actually retire, but you want to define it in realistic terms from two through five years before you actually intend to retire.

Once you’ve envisioned your post-work life, you need to integrate how you’ll finance that vision. This is where you’ll bring in monthly expenses — both fixed and variable — so you can come up with an annual number that you can compare to your entire nest egg.

Live with This Plan

Now that you have this tentative plan in place, try to see if you can live by the plan for a period of time, using the budget that you are anticipating as a guideline. You may not be able to take a full month off from work, but see if you can take at least a week or to so you can honestly complete the test drive.

Live this time how you would in retirement. This will give you a good idea of how realistic your budget is — not from a savings’ perspective but from the viewpoint of whether you can actually live that way. It’ll also provide insight into whether you’re spending more money than you had anticipated, whether you are ready to stop working and how you might spend all your newfound free time.

The test drive will give you a risk-free way of actually experiencing what it might be like to live in retirement by the plan you have created. If you find you’re spending more than your budget allows, you should be OK, because you’ll still have your full-time salary as a cushion.

Revise the Plan Accordingly

The final step of the retirement test drive, D. Paterson Cope says, is to reflect on that time you had off and revise your retirement plan according to your needs and wants.

Maybe you need to beef up some budget line items or cut back on others. Maybe you realize that you’re not quite ready to stop working, or that your projected nest egg won’t be sufficient enough to retire in, say, two years’ time.

Whatever the outcome, this retirement test drive will ensure you’re truly prepared to enter this new phase of your life worry free.

About D. Paterson Cope

Paterson Cope, CFP® is the founder and CEO of Cope Private Wealth, a financial planning and wealth management firm specializing in assisting retirees and people who are about to retire. D. Paterson Cope has been providing financial advice for more than 30 years. He first earned the designation of Certified Financial Planner (CFP) in 1997. When he isn’t working, he enjoys spending time with his wife, Jennifer Miree Cope, and the rest of his family in Mountain Brook.

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