Palm Springs Retirement

Not long ago I had a chance to spend some time in Palm Springs with my brother.  We played golf with a group of his friends from the golf course he belongs to in Canada.  Some are retired and spend their winters in the sun, while others travel to the south several times over the winter to get away from the cold and their work.

"I could really handle this lifestyle", said my brother Gary.  "I could golf every day, soak up the sun and go for dinners with all of the other people I know who are also retired down here."

On the surface, I had to agree with him.  For a golfer or sun worshipper, what a place to retire!  

After all, if you have the money living in Palm Springs would be part of many people's dream retirement.

However, I also had a chance to speak with and observe many of the people in my brother's social group who were "living the dream".  Did the fact that they had money, lived under palm trees and could golf every day automatically ensure that they would have a happy retirement?

I discussed this with John and Anne, a couple from Calgary who spent their winters in Palm Springs and their summers at the cottage back in Canada.

"There are so many of our friends down here who are as bored in Palm Springs as they are in Canada", says Anne.  "Just because they are retired here rather than in Calgary doesn't automatically mean that they are going to be happy."

It reminded me that the variables that make for a happy retirement are usually more internally driven than externally.  It doesn't matter where you live, how many rounds of golf you play or even how much money you have if you aren't doing the right things internally to be happy in retirement.

"The key for us", John told me, "is that we try to keep as much structure in our life and to balance our activities so that we aren't always doing the same things.  You have to keep busy, but that means staying mentally alert as well as physically active."

Friends and an active social life are extremely important to John and Anne, just as they are back in Canada.  "That part doesn't change", says Anne.  "While we enjoy each other's company, we still know that we need to get out and meet people to really round out our lifestyle here".

The couple both belong to separate golf leagues though they do try to golf together at least twice a week.  "Our social life here really mirrors our life back in Canada", says John.  "We have our own friends and then socialize together with couples and singles that we have come to know here."

As we talked, it occurred to me that Palm Springs provided a great venue to retire in, but that alone was not going to mean that a successful retirement was a given.  "We know lots of people who figured that they would have it all if they could afford to retire down here", laughs Anne. 

 "Once they get here, they soon recognize that they things that made their lives happy back home are the same things that they have to look after in Palm Springs.

Retirement planning for uncertain times

Over the holidays, I had a chance to spend some time with many friends.  Inevitably, our conversations turned to the economic crisis and the outlook for the future.  I don’t recall a time when there was such pessimism among my social group, despite the fact that most were either retired comfortably or were close to the end of a successful business career.

 

The immediacy of retirement planning has shone a brighter light on discussions of today’s financial uncertainty.   In the past when most of my friends were working, these economic setbacks were of short-term concern; they might affect the business outlook for a couple of quarters or perhaps affect the performance of investment portfolios.

 

Today, however, concerns about our economic outlook are clouding the long-term thinking when it comes to retirement.  Worry has caused even my most reasoned friends to question their long-term security and the viability of their retirement dreams.

 

While there are some things that we all should be concerned with, there are also some worries that are just plain irrational.  The world is likely not coming to an end and you will not have to keep working until you are in your seventies.  However, there are some things that you can do to make your retirement plan more trouble-proof.

 

Here is how I see these market conditions affecting retirement planning for those who are not yet retired.

 

1. If you have any choice at all, you might want to review your goal of full retirement.  A lot of people are only looking at the leisure aspects of retirement and have decided that they want to leave the workplace entirely.  If we learn anything from the economic setbacks of the past year, it is that investment markets, real estate and the overall value of our money can turn negative virtually over night.   There are lots of benefits to staying involved in your work, even if you only work part-time or take long sabbaticals.   Continuing to work can add to your retirement cushion in difficult times.
2. Make sure that you have a clear understanding of how much your retirement is going to cost.  Consider how much your lifestyle is going to cost by thinking in terms of three money pots that you will have to draw on: the money you will spend on essential purchases each month, the lifestyle or life enjoyment money that you spend and finally the amount that you need to have in your nestegg that will give you a sense of financial comfort.
3. Look at your investment portfolio and ensure that at least three years    living expenses is covered by a pension, or safe, secure investments.  Growth is important, but only after you have covered your expected needs.  No one has any idea how long the uncertainty will last, so err on the side of caution when you are protecting your retirement savings.  Safe secure investments are those that are principle protected and will not suffer from any further meltdowns.
4. Have access to at least three months of ready cash.  Retirement will be a time of unexpected demands and you don’t want to be in the position of having to cash something in at an inopportune time.  As you make your retirement plans, think in terms of short, medium and long-term time horizons and plan your investments and savings accordingly.
5. Consider not only the dreams and goals that you have for the future, but also those things that may not unfold as you plan.  I call this a “fire drill”; all that means is that you consider how you will protect yourself from such things as market meltdowns, economic uncertainty, personal uncertainty, health issues and family challenges.
6. Be prepared to move into retirement earlier than you might have expected.  As companies react to economic conditions, they may make changes that will affect your retirement plans.  Just because you plan to retire in five years doesn’t mean that you won’t wake up tomorrow morning with a golden handshake or lay off notice from your company.  If this uncertainty teaches us anything, it is to be prepared for the unexpected.