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Include De-Cluttering in Your Retirement Planning

The weekend after Mother’s Day is the annual garage sale in my neighborhood. I love this time of year because I love to de-clutter my life. Garage sales always remind me that I don’t need things to be happy, and I can better enjoy experiences in life. The money we make from the garage sale goes into a trip fund which we use every year for spring break. The garage sale allows us to have a family experience that brings more happiness than owning more stuff. It is a good time of year to think about how to de-clutter your life in preparation for retirement.

It’s Not About Stuff

We all know stuff doesn’t make us happy. But we forget that in the moment. This is why I don’t actually attend other people’s garage sales—I figure I don’t need anything else in my house, so why put myself in the position of getting excited and spending money in the moment. Retirement is much the same way. We often collect stuff in anticipation of retirement that we really don’t need. In the moment it seems like a good idea, but when you look back at it, all the individual stuff did not necessarily help you reach your bigger strategic goal. (For related reading, see: The Complete Guide to Vacation Properties.)

Accumulating Stuff Like Houses

The road to retirement is one of patience, and the more patient and disciplined you are, the more success you often have. Houses are a good example. Many people’s dream of retirement is a second home, often in a sunny part of the country. While this can be a great lifestyle, many jump into it too early without thinking about the long-term expenses that increase their standard of living (and which cost more money) and the fact that dreams change. 

Before you purchase something like a second home, make sure you understand that what you believe is the perfect home today may not be the perfect home five or 10 years from now. There are several issues that should be thought through before buying a second home:

  1. Location: Buying in a different location is always tough because, until you live there, you don’t always know if you are on the exact street you want. Renting can be a good way to spend a few years getting to know an area before buying.
  2. Renting: Buying a home with the idea that you will rent it when you’re not there often doesn’t work out. My experience is that you might be able to rent it enough to cover part of the expenses but it is usually not enough to cover everything. Add to that an assessment from the homeowners association and any one year gets really expensive. (For related reading, see: Buying a Second Home to Rent: Dos and Don'ts.)
  3. Needs and maintenance: What we are OK with in a home at 52 might not work for us at 62. At 52, there might not be a need for an extra bedroom, but at 62 you might have grandchildren visiting and you will need the additional space. Or maintenance that is easy at 52 might not be as easy at 62. Buying earlier in life can lead to the desire to change houses once you actually start using it more, and this can be expensive.

Big purchases like a home can clutter your life in ways you might not want going into retirement. Think about this when you are tempted to buy something too soon. To me, patience means you wait until you are really ready to use something. For many who are buying a second home, that means the year you retire.

Investments Are Like Antiques

For some people, investments are like antiques—they collect them and never get rid of them. Go through your portfolio—maybe with the help of a financial advisor who isn’t taking commissions—and review why you bought something, why you would hold onto it, and what it costs to keep it. Fees might not be a big issue while you work and can keep making money, but once you retire and your pot of money is your pot for life, make sure you are not adding to your monthly expenses more than you need to.

Taxes are also a part of this equation since they act like a fee on your portfolio. Spend time with your financial advisor and accountant to clean out the tax-inefficient investments and focus more on tax efficiency. The de-accumulation phase of retirement calls for a different strategy than the accumulation phase. (For more from this author, see: How You Invest Now Can Affect Taxes in Retirement.)

Finding Purpose in Retirement

Finding purpose in retirement starts by de-cluttering your life. You have to assess what got you here and decide if you really need that for the next phase. The process is freeing since it allows your mind to discard old notions and embrace new possibilities. And that is what retirement is all about—beginning the next phase of life where you have the financial freedom to experiment with new experiences.

(For more from this author, see: Should You Subsidize Your Children's Income?)


The opinion of the author is subject to change without notice and must be considered in conjunction with relevant regulation, as well as subsequent changes in the marketplace. Any information from outside resources has been deemed to be reliable but has not necessarily been verified. Each individual has unique circumstances to which this information may or may not be relevant. Under no circumstances will this information constitute an offer to buy or sell and it does not indicate strategy suitability for any particular investor.