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Been dreaming of walking away from the daily grind? Financial planners are increasingly recommending you rethink taking the plunge and instead map out a transitional phase.
“Retirement doesn’t have to be all or nothing, and it’s important people don’t think of it as jumping off a cliff,” says Cheryl Sherrard, a financial planner in Charlotte, N.C. “We need to change the conversation to be about reinventing or re-envisioning yourself.”
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Even for those who are pretty certain their future happiness lies in never punching a clock again, financial advisers say a phased-in approach — through something like part-time work or six months of living on a scaled-down budget — can be key to ironing out kinks you might not foresee when retirement is planned only on paper. “Practicing” your next chapter can let you transition with greater security and confidence — or decide you’ll wait a little longer to do so.
Living the budget (Next up: the dream)
At least one year before retirement (but ideally about five years prior), financial planner Patrick Runyen of Wayne, Pa., advises clients to have their paychecks sent directly to a brokerage account. Then, instead of living on their income, they receive a “portfolio paycheck” every month from their retirement assets — just as they would in real retirement. If that fixed amount doesn’t feel like enough, they might decide to work longer, or part time, Runyen notes.