Most of us have caught ourselves day dreaming about what could be someday. I see this happen a lot with clients in their 50s, but it can also happen earlier. I’m a good example of Life 2.0. I started my working years as a professional cellist. I had a great career playing with top performers all over the world. But by my early 30s, I needed to explore something new.

So I went back to graduate school and started down the path of a financial advisor. Life 2.0, for me, involved accepting a significant cut in pay, working on credentials for the better part of ten years and starting from the bottom and working my way up in larger companies.

The cool thing about Life 2.0 is you define what success means for you. Maybe it’s money. Maybe it’s freedom. Anybody who has reinvented themselves will tell you it is a lot of work. But for those people who feel the call, it’s worth it to follow a new life adventure.

Envisioning Life 2.0

It starts with a dream. But to be successful, you need to have a well thought-out plan. I’ve had the privilege of helping lots of clients who have successfully launched second careers at all phases of life.

  • CEOs who now travel worldwide adding their expertise to boards of private and public companies.
  • Young millionaires who cashed in their stock options, chose to spend time with their young families and work doing what they love.
  • Corporate executives who created lucrative consulting practices.
  • Business owners who now travel the world for months at a time exploring new cultures.

Life 2.0 comes in all shapes and sizes–all price points and all kinds of educational backgrounds. Your financial advisor can act as your sounding board, helping to sketch out the parameters around trying something new. Most of the time, it takes planning for years to get to the point where you are ready to start a new venture. Look at spreadsheets detailing cash flow, expenses, investment returns, inflation–whatever is relevant for you.

Sometimes the answer is to “retire in place.” You might cut back your hours in your current job and have more time for the things you love. That allows your retirement accounts to continue to grow while you transition into what’s next for you.

Increasingly we help retirees prepare to transition to a new phase of life. Perhaps the big house and related expenses and tasks are no longer what they want. They may want to evaluate Continuing Care Retirement Communities as a next step. That may also mean thinking about long-term care insurance and expenses. Frequently it also involves talking to the next generation about what happens next and how best to prepare.

If you’re thinking about transitioning to a new phase of life, ask yourself these questions as you ponder what’s nest.

Life 2.0 Checklist

  • How would you like to spend your time? How would you structure your days? Can you do this in the same job you’re already doing with a few tweaks?
  • Do you know what you’re spending? Do you have larger family obligations, like getting your kids through college, that you need to complete before you can contemplate a bigger change? Track your spending if you don’t really know what you spend.
  • Have you done a “retirement projection”? You may not want to completely stop working, but you should project out cash inflows and outflows to make sure you can sustain your lifestyle.
  • Where do you want to live? Do you want more than one home base? What are the tax implications of doing that? Have you tried renting or leasing a place in your preferred location before you buy?
  • Are there family considerations to think through? We see clients abandoning their original plans when the grandchildren start winning their hearts. Maybe you don’t want to move far away from the kids and grandkids. Or maybe you do Should you budget for “experience vacations” where you take the whole family on vacation and pay everybody’s way? Can you afford that?
  • Work colleagues can become “family” over a lifetime. How will you socialize after you leave your current job? This can make a tremendous difference to your happiness.
  • Have you thought about travel? Many clients think they want to spend a large portion of their lives exploring the globe only to find out that health issues, or care taker responsibilities or finding joy in simpler things starts to take precedence. How much should you budget for these costs?
  • You may have thought about what you need to cover costs. But did you factor in helping others? Especially kids and grandkids. Maybe siblings or others needed a helping hand. Be realistic about how many people you can help. If you no longer have an income stream, these decisions take on new dimensions. Or perhaps you want to keep a part-time income stream going to give you the freedom to help more people.
  • How do you want to be involved with charitable giving? Should it be through time? Money? Expertise? The equation may change as your income streams fluctuate.
  • How will you give to charities? With IRA money in Qualified Charitable Distributions (QCDs)? Through a Donor Advised Fund? Using appreciated stock?
  • There are tax considerations in choosing your sequence of retirement withdrawals. Which assets will you tap first to cover expenses? How can you take advantage of tax minimization techniques to make sure you’ll have enough money to last your lifetime or to leave to heirs?
  • How are you going to pay for health costs? Other than running out of money, this is one of the biggest concerns we hear from clients. If you leave your job before age 65 (when you’re Medicare eligible), you will need to have private health insurance or COBRA (that usually last 18 months).
  • No one likes to think about it, but what if you start to experience cognitive decline? Do you have a plan in place to address those issues? How will you pay for more specialized care?
  • Should your investments change to reflect a different stage in life?
  • Should your insurance coverage change? You probably won’t be able to get long-term disability coverage. You may not need as much life insurance depending on your goals for wealth transfer. Have you thought about travel insurance if you’re outside the U.S. (not covered by Medicare)?
  • Do you have a strong financial team in place to help you make these decisions? An estate attorney to guide you through creating documents that reflect your wishes? A CPA to help guide you through complex tax decisions? A financial advisor who thinks holistically about investments, insurance, retirement, tax, kids, parents, estate planning, and coordinates with the other professionals?

Life 2.0 can be anything you choose if you’re willing to start early enough to build a solid plan for the next phase in life. Some of the richest experiences are just waiting to be explored.

Copyright ©2020 Stevens Visionary Strategies LLC. All rights reserved. No part of this publication may be reproduced, distributed, or transmitted in any form or by any means without the prior written consent of the owner except as expressly permitted by U.S. copyright law.

Disclosures
The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.