by Len Hayduchok
Whether one is a lifelong Delawarean or a newly retired transplant to coastal life, the retirement stage opens up all types of lifestyle opportunities along with options for how to benefit from that saved-up nest egg. How money is used during retirement is closely linked with lifelong attitudes related to money, called financial personalities, each with a different set of strengths and weaknesses. The four most well-known types are called spenders, savers, investors and planners.
Let’s meet the Financial Personalities using fictitious, non-gender-specific names. Starting this week with Jamie, personality #1.
Meet Jamie. Jamie enjoys money, enjoys relationships and enhancing relationships by spending money. A very giving person, Jamie is fun to be around. In general, Jamie has loose budgets, and may not be sure how much is in the bank account at any one time. As a short-term financial thinker, Jamie wouldn’t often be approached for financial advice (except for where to get a good deal, because Jamie thrives on finding bargains!).
If Jamie were to find $100 in a coat pocket, the thought would be “How can I enjoy this the most?” Perhaps that new book, a concert ticket, or gift for that friend’s birthday on Friday. Overall, this is a fun personality. Jamie is what might be called a “Spender.”
Spender’s financial priorities in retirement are to have money to enjoy throughout their entire retirement. They may work more to have money to spend so that they can keep up the lifestyle they prefer. There are pros and cons to this personality, as with all personalities. Spenders enjoy money and are often smart shoppers when they’re not impulsive. They might have trouble budgeting and might be impulsive. Spenders can also be shopaholics. They are not generally good with money for planning purposes and because they’ve failed to plan and also spent more freely, their number of resources might be somewhat limited. They might run out of money in their lifetime.
Spenders have a high need for a Financial Planner. They do not do financial planning all that well, and they recognize it. They also recognize that they need a Financial Planner to have resources to spend through their entire lives. The financial planning strategies that Spenders are most interested in are 1) “Creating Wealth”—because they need those assets to be available to spend, 2) “Generating Income” –because they need an income strategy for their entire lives, so they do not run out of money, and 3) “Neutralizing Risk” –because of their spending velocity.
The financial products that are most recommended for Spenders are 1) safe resources that provide lifetime income (in this category they can consider bonds, an investment account with a systematic withdrawal strategy, and annuities, particularly growth annuities because of the higher growth they provide than the other safe resources, 3) and investments to encourage growth and diversify their portfolio, although spenders tend to be a little more short-term thinking in their finances. Insurance products are also something spenders can benefit from, but they’re not interested in paying premium for insurance products so term insurance might be a better option in the life insurance category of products.
What is the best financial personality? The best financial personality is WHO THE RETIREE IS! No person can change their innate personality; however, they should be aware of personal strengths and weaknesses. (NOTE: No one is just one financial personality, and most often actual behavioral patterns regarding finances are often a combination of characteristics from each personality.)
It’s important for retirees to work with a skilled Financial Advisor. When considering an advisor, it’s key to check their credentials. Working with a Certified Financial Planner™ practitioner working in a Fiduciary capacity can help retirees make better choices considering personality and priorities and fill in the gaps in a retiree’s knowledge and behavior patterns to strengthen their financial health.
Len, the Delaware Retiree Advisor, is a Certified Financial Planner™ with over 30 years’ experience navigating the complexities of Financial Planning and Retirement Planning. As the founder of The Delaware Retiree Connection, and the director and owner of Dedicated Financial Services, Len offers his wealth of experience to guide others through the mire of Financial and Retirement Planning. As a Certified Life Coach, he pairs his financial expertise with a heart to help others who want to make the most of their retirement plan.
Investment Advisory Services are offered through Turner Financial Group (TFG), an SEC registered advisory firm. Insurance products and services are offered through individually licensed and appointed agents in appropriate jurisdictions. Leonard Hayduchok NJ License #9243813, Dedicated Financial Services LLC, NJ License #1663601, Leonard Hayduchok, DE License # 1331748; Dedicated Financial Services LLC, DE License # 3000323897.