Retirement plan hitting a bump? How to create a resilient roadmap

PHILADELPHIA (WPVI) — Many people make retirement plans only to have them disrupted or even derailed by circumstances outside of their control.

But there are ways to pivot and create a resilient retirement roadmap, so you’re ready for just about anything.

Chuck Minnich, of Foundation Capital Management, LLC, says, “Retirement really has changed over the years. So retirement planning needs to change also.”

Retirement planning used to be akin to a smooth one-track train ride, but he says, “Now it’s more like airline travel nowadays where you might get bumped, you might get delayed, you might get rerouted.”

Gone are the days of making it to that circled date on your calendar. According to the Employee Benefit Research Institute, nearly half of Americans (47%) leave the workforce sooner than planned. Sometimes they step out early by choice, but more often than not, it’s due to health problems, burnout, or caregiving demands; company restructuring and layoffs; or market swings and chaos in the economy.

To protect yourself, Minnich says, “You really need to have in mind different options and plan for multiple scenarios.”

His first tip is you create a retirement roadmap with multiple exit ramps, so you’re covered whether you get out of the workforce early, on time, or in phases, where you leave your full-time job to consult or do gig or part-time work.

His second tip is to maximize the “catch-up years,” that critical window after children and before retirement.

Minnich tells us, “Your expenses that you had previously with the kids are gone, rather than use those for personal enjoyment today, you wanna redirect them immediately towards building that retirement nest egg.”

The amounts you can put into retirement plans at work have gone up dramatically over the years, and “there’s always been a bump up if you’re over 50. Now there’s bump-ups in your 60s also,” Minnich says.

Tip three is to get emotionally and mentally ready to leave the workforce. For many people, their job is their identity, so pave the way for a renewed purpose and schedule.

“The lack of social interaction, the lack of mental activity and physical activity can really become a problem. For many people, that’s why the phase-out approach works well,” Minnich tells us.

Minnich also advises you to make sure you have enough cash and conservative investments on hand to cover your income for a full market cycle. That way, if the market crashes, you’re not forced to sell.

Instead, you can keep the shares you want in your portfolio once the market inevitably recovers.