Conditioning for Retirement Spending

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Athletes know that conditioning matters. Sports conditioning improves overall athletic performance and reduces the potential for or prevents athletic injuries. During conditioning, whether “in” or “out” of season, you are working on strengthening mind and body to achieve your personal goals. Run faster. Jump further. Lift more. Kick harder. Throw with accuracy. Many of the benefits of athletic or physical conditioning have to do with developing a winning mind-set: increased self-confidence, resilience, optimized cognitive skills, better moods, and overall improved health and quality of life. So when I was asked by WalletHub(R) to provide some input on living on a fixed income in retirement and the financial impact of the pandemic on retirement plans, I began to think about conditioning. As I developed my responses, I was reminded: The athletic conditioning phase of training is not where you expect to achieve peak performance.

In the Ask the Experts section of WalletHub(R)‘s article, “2021’s Best States to Retire” I provided the following guidance.

What are some tips for living on a fixed income in retirement?

  1. Use a budget application or spreadsheet to spend at least one year observing the timing and amounts of your cash flows before retirement. While many planners suggest using a percentage of pre-retirement lifestyle expenditures for retirement, as you get closer to your retirement date it is time to take a more critical, objective look at how much you spend, where you spend it, and when you spend it over a 12 to 24-month period. I would even suggest you observe spending habits for up to five years so that you can take note of trends in costs of housing, food, health care, and retirement social activities. Equipped with a good understanding of pre-retirement expenditures, a client can prioritize and modify the timing and amount of expenses within the boundaries of expected retirement income cash flow.
  2. Connect with community, local, state, and federal financial literacy resources to stay current with financial issues that will affect how, where, and when you will spend money in retirement. Knowledge is power.

The financial impact of the pandemic has many Americans reevaluating their retirement plans. What are some new points of concern for future retirees in considering where to retire? 

  1. For individuals that were generally healthy pre-retirement and expected to be relatively healthy during retirement, access to quality health care facilities that provide medical expertise in geriatric care will become even more important than it was in the past. People with asthma, diabetes, and heart disease as well as older people are particularly vulnerable to COVID-19. The virus can damage several organs and, collectively, we hope multi-year studies will provide valuable insight into how the infection affects short-, medium-, and long-term health. Availability of quality healthcare services and even potential new limitations on care covered by medical and long-term care insurance coverage should be closely examined.
  2. Long-term care expenses will generally increase since we are living longer. The potential need to close the gap between funds available and funds required for chronic illnesses due to potential infections must be considered.
  3. If you plan to avoid extensive travel, what lifestyle activities are offered in your chosen retirement location? Cost and access to ensure you enjoy retired life with rich activities within budget can lower or increase your retirement cost of living. I think today’s retirees need to consider a couple of options when it comes to location. The pandemic compelled us to collectively find different ways to learn, create, communicate, and seek adventure. What may not have been a retirement location pre-COVID-19, may be a great possibility during or post-COVID-19.

Preparing for any financial goal, or “waypoint” takes preparation. It takes time to build knowledge, wisdom, discipline, and economic resilience. Similar to the athlete in the conditioning phase, we need strive to build financial and human capital portfolios that improve our quality of life (overall athletic performance) and can resist and recover from systemic and fundamental risks (injuries). According to an Ohio University “Basics of Physical Conditioning” article, the most important physical conditioning factor athletes under the age of 12 or 13 is technique. After the age of 16 mentality is the most important factor in improved sports performance; the second most important factor is physical conditioning. Between the ages of 12 and 16 more structured conditioning programs are important to young athlete performance. For the purposes of this particular metaphorical narrative, we are engaging in “structured conditioning programs”, intentionally saving for retirement. For the final two to five years before retirement, we need to be transitioning to be mentally and financially prepared to adjust to our predicted retirement cash flows, the realities of our health needs, and the availability of health and lifestyle resources. Here is a general “financial and human capital portfolio” conditioning workout to consider as you near retirement.

  1. Practice living on your expected retirement income.
  2. Invest in your financial literacy, pre- and post-retirement.
  3. Re-examine your long-term care resources (financial and family members).
  4. Prepare to enjoy retirement in a world where we have collectively learned to create, communicate, and seek adventure in new and different ways.
  5. Repeat Step 1.

Athletes know…Conditioning takes place well before you approach the starting blocks, take the mat, or huddle. Prepare to achieve peak performance.