Transitioning Into Retirement...
Earlier this week, I was fortunate enough to be invited by a long-time friend, client, and retired UAL Pilot to help him get current in a Beech Baron. It is owned by a friend of his, who needs a pilot every now and then. For me, it was a great way to hone my MEI skills (it’s been while) and get to spend some time with a good friend.
That evening, at the ranch where we stayed, was a typical Texas Hill Country evening. Beautiful, peaceful, and stars covering the clear skies. As we sat around the oversized in-ground fire pit, sipping on a glass of wine, we talked about a lot of things, including one about the transition that he had made from flying large wide-body aircraft around the world, to retiring and adjusting to the fact that his paycheck is no longer in the $250K+ range. That’s a tough one to swallow—for anyone.
Other than your spouse needing to figure out what she’s is going to do with you being at home all the time now, the retirement transition is a very emotional one. Going from Jet Pilot to Retiree is a major change. Flying large jets around for a living is not your typical job and most people dream of having that opportunity— let alone actually realizing it.
Although as pilots we seem to get lost in contract negotiations, scheduling disputes, and the fact that there is a procedure in place now for needing a restroom break, I have never heard pilots complain about their jobs. At least not when the cockpit door is closed, and they’re left alone to do what they do best.
Now, Of course I’m not suggesting that pilots have inflated egos, but it’s good to fly a jet and pilots like to brag about it. Even though they usually don’t, at least they know they can.
For A-Types, that’s hard to walk away from. Especially when its premature due to health, age, or pension plan uncertainties— just to name a few.
I’ve had this conversation many times, especially since I have helped so many pilots retire. The experience is different for everyone and there is no right or wrong answer, just the one that is right for each individual and his family. From my experience with retirees, there are basically three areas that seem to stand out. Physical, Emotional, and Financial.
The transition to retirements is also a very physical one. I’ve witnessed it personally several times. Amazingly, I’ve also witnessed the reversal as well. Although not many, some retirees go from the cockpit to the couch. Although probably not literally, but they don’t find anything for themselves to do or don’t do what they like to do. Once they’re done with the Honey-Do’s the first couple of months, they wake up without a purpose and the ultimate result is a fast track to “Getting Older”.
It’s not easy to see some one that was once full of energy, just 6 months prior, to looking like he has aged about 5 years. The reverse is also true. Like clockwork, many of those that do not have work after retirement will call me about 6 months later and say, “we need to update my plan because of my new job”. Amazingly, in just a few short months they start looking more energetic, more fit and, more importantly—happier.
I'm not suggesting that everyone go get a job after retirement— just to find something to do that you enjoy. It is YOUR retirement and you should enjoy it. After all, at least in my opinion, you’ve certainly earned it.
The financial transition to retirement is not an easy one. It’s also the main reason I created my firm. It is certainly different going from $250K+ per year to having to worry about making your retirement assets last for the next 30 years. A couple of million may sound like a lot but divide that over a long time frame and it quickly becomes very little.
One thing that I have always found very difficult to communicate is that retirement planning is not about making money. That’s the easy part. Retirement is about the distribution. That is the longest lasting and most difficult part of Financial Planning. Although beyond the scope of this article, the distribution mode is a very difficult one to transition to. We all focus our lives on accumulating as much as possible. We give very little thought to how we are going take from investments and fund our personal bank accounts. You have to worry about taxation, down markets, flat markets, unplanned expenses, and how all of that affects the long-term picture. Difficult indeed!
Making the money we make while employed makes it easy to pay for things as you want them. In retirement, you must think twice and wonder if you really need that $120.00 Tommy Bahamas shirt. Some do, most don’t. If you do, look in your old overnight bag, you’ll find one in there that you can wear.
The idea is to be practical. Just like your flight needs a flight plan, your retirement needs a retirement plan. It should also include a well thought out distribution plan. A solid one with an objective view at your situation. Regardless of who you work with, have them plan out your distribution and make sure you ask them to give you a complete picture and give you a worst-case scenario.
If all someone wants to do for you is invest your money, find someone else. A good planner should be able to make your transition to retirement an enjoyable one. Not just from a financial perspective, but one that will make you feel emotionally at ease as well. Retirement transitions are not monetary, they are emotional. As in all walks of life, knowledge is power. As you near retirement, you should arm yourself with all the tools available to make this transition as smooth and predictable as possible. Just as we plan for each contingency that we can think of on each flight, planning for our retirement should be no different. There is nothing better than knowing that no matter what happens in the world, you will be ok. This requires proper planning and a contingency plan, should you experience a negative event sooner than expected.
Retirement is a life-changing event. A well planned out retirement will address these three areas and given the fact that you have spent most of your life preparing for this transition, go through the extra effort to find a truly objective Financial Planner. This may seem like a daunting task at first, but an experienced planner can help sort his out for you.
Preparation is the key to retirement success. Given the multitudes of qualified independent planners out there today, I am of the opinion, that no one should have to retire in any other way.
Alex A. Tapia, AIF ® President and Retirement Wealth Planner Aviation Retirement Strategies, LLC.