Retirement Choices - Eight Key Dilemmas That You and Your Advisor Should be Addressing

8 key dilemmas that you and your advisor should be addressing

By Robert Pyle

Key Takeaways

  • Even the affluent worry about running out of money in retirement and no one really knows how long they will live.

  • Some retirees have to increase spending in their golden years while others need to go on a budget.

  • Don’t wait too long to enjoy “bucket list” trips and other life changing experiences--or you may never get the chance.


If you worry about running out of money in retirement, you’re not alone. According to recent surveys conducted by the AICPA and Transamerica, about half of retirees cite “outliving their money” as their No.1 concern. That dovetails with the 2019 CPA/Wealth Adviser Confidence Survey™ which found that two-thirds of financial advisors believed their clients were “in danger of outliving their money” when they first came to see them. The survey of nearly 300 CPAs and wealth managers was conducted by CPA Trendlines, The Financial Awareness Foundation and HB Publishing & Marketing Company) this spring.

While these numbers are consistent with what I see in my practice, it’s important to understand that there’s no secret formula or magic algorithm to use when planning your retirement. It’s a complicated balancing act that is constantly changing as your life circumstances change.

As my practice has evolved over the years, I’ve seen eight common dilemmas surface time and time again for our clients. There are no quick and easy answers, but getting the issues out in the open, is a key step in devising solutions. How many of these sound like you?

Dilemma #1: Pay for all of your children’s’ education (or just part of it)
This dilemma really has two parts: First, is an out-of-state private college (say $60,000 per year) worth twice the financial hit as an in-state public school costing say, $30,000 per year? There are pros and cons to attending each type of college and no two students have the same needs and career expectations. Just keep in mind that if you go the out-of-state private college route, that’s an extra $120,000 over four years—and that’s before you factor in airfare, cabs and other travel-related expenses that aren’t deductible. Trust me, it adds up quickly. If your current spending is $10,000 per month, then that extra tuition hit is equivalent to 12 months of your normal spending. That means you’ll have to wait an extra year to retire for each child you send to an out of state private school.

The second part of this dilemma—regardless of which type of college your children attend—is paying the tuition 100 percent up-front or asking your children to shoulder some of the student loan burden after they graduate. Doing so will certainly make the young adults in your life financially responsible and may allow you to retire earlier—if you don’t have to help your recent grads with the student loan payments.

See. I told you it wasn’t easy.
That’s why we use MoneyGuide Pro, powerful financial planning software that helps us model a vast array of calculations and what-if scenarios for our clients.


Dilemma #2: Take trips now and work an extra year or so later 
When most people hear the word “retirement,” visions of leisurely travel to exotic locations fill their head. No more counting precious PTO days. No more checking in with the office every hour on a painfully slow Wi-Fi connection. No more red eye flights to get back to the grind on time. Sounds great right? But, if you wait until you and your spouse are 100-percent retired, you may not be healthy enough (mentally or physically) to travel extensively and fully enjoy the trip. That’s why many near-retirees start taking bucket-list trips about five years prior to their planned retirement date—and plan to remain employed an extra year or two--so they don’t spend their golden years muttering: “Shoulda Woulda Coulda!”

We recently modeled a retirement scenario for a couple who was about five years out from retirement.

They wanted to take a two-week overseas trip every year for the last five years of their working lives. They liked to take fairly high-end tours, so we budgeted $10,000 to $20,000 per trip per year. That’s $50,000 to $100,000 in after-tax dollars over five years. Since the couple’s normal living expenses were about $10,000 per month, we helped them see how staying in the workforce for a year longer than expected would provide the extra income they’d need to enjoy their yearly overseas trips without causing financial hardship.

Dilemma #3: Delay taking trips until after you retire
Here’s the opposite of Dilemma #2. If you save and save during the last years of your working life—and don’t go on any exotic trips--you’ll be able to retire a year or two earlier than the couple above, but one of you (or both) may not be healthy enough (mentally or physically) to start enjoying extended overseas travel.

Dilemma #4: What can go wrong?

Your health can deteriorate, a spouse can pass away unexpectedly, or one of you could suffer from dementia or Alzheimer’s disease. All of a sudden, your travel plans are out the door. All that money you diligently saved for travel during the final decade of your working years could easily go toward healthcare expenses instead of seeing the world.

Dilemma #5: Children may not be able to spend time with you later
When your kids are younger and still living at home, you may be swamped at work, but it may be the last chance you’ll have to go away together as a family for an extended period of time. Once your children are in college or in the workforce, they may have too many academic or career obligations (possibly young children of their own) to be able to go away with you on that trip to Europe, Africa or Australia that you always dreamed of.

Dilemma #6: When pinching pennies doesn’t make sense
I know this sounds counterintuitive, but sometimes we have to encourage clients to spend more in retirement, not less. For example, we work with one couple in their early 70s. They have no children or grandchildren; they’re in good health and they have about $1 million in investible assets which provides an annual income of about $120,000. They always talk to me about going to Europe, but they don’t want to spend the money. I bring up their Dream Trip every three months at their quarterly meeting, but they were brought up shortly after the Great Depression, and it’s psychologically very hard for them to splurge on non-essentials. Like many seniors, I also suspect they have lingering fears about running out of money if they may someday need say, $70,000 per year, for eldercare—for themselves or an elderly parent.

Sometimes we use our financial planning software to show clients how much they can spend every month for the next 20 years and still be okay. That can be just as much of an eye-opener as it is for clients who are spending too much. If they don’t use some of their hard-earned savings to enjoy life and I they have no one to pass it on to, then it’s all going to have to go to charity or back to the state when they pass on.

Dilemma #7: Cut back your spending
In financial planning there’s something called a “safe withdrawal rate,” typically 4 percent of their nest egg per year. If clients are spending 8 percent per year then they’re in danger or running out of money.

Over the years, we’ve had to sit down with clients occasionally and tell them to rein in their spending. This is not an easy conversation for an advisor. Clients could be spending on houses, new cars, trips or tuition for their children or grandchildren. For example, if a couple is in their mid-60s and spending $80,000 per year on a $1 million portfolio, this could easily outlive their retirement nest egg. It’s a big wakeup call for folks who’ve been affluent and successful their entire adult lives. By using MoneyGuide Pro, we can show them that if they keep spending money at their current rate, their money will only last them 10 to 15 years. Sometimes they have to see the illustration two or three times before it hits home that they could be out of money before they turn 80.


Dilemma #8: We don’t know how long we will live
It’s very important to be honest with your advisor and make sure they’re aware of all of your life goals and aspirations. You may want leave millions of dollars to your heirs and favorite causes when you pass on or you may want to enjoy your money while you still can and ideally pass away with an “empty financial tank.” No advisor, no matter how talented, can predict when clients are going to pass away. Most doctors can’t either.

Everyone knows a couple that retired and planned to take lots lot of trips before something came out of left field to derail their plans. One spouse could have dementia, or another could be diagnosed with cancer. As an advisor, I always feel terrible when this happens because in hindsight, I could have urged them to retire earlier and take more trips when they had the opportunity.


We live in a world of life hacks, rules of thumb and 24-hour door-to-door delivery. It’s temping to take the same quick-fix approach to our retirement dilemmas, but you’ll be sorry if you do. It’s on ongoing iterative process and it’s best to have an objective confidant by your side who can guide you through all the twists and turns along the way. Contact me any time if you or someone close to you is wrestling with life and money dilemmas like the ones discussed above.

Robert J. Pyle, CFP®, CFA is president of Diversified Asset Management, Inc. (DAMI). DAMI is licensed as an investment adviser with the State of Colorado Division of Securities, and its investment advisory representatives are licensed by the State of Colorado. DAMI will only transact business in other states to the extent DAMI has made the requisite notice filings or obtained the necessary licensing in such state. No follow up or individualized responses to persons in other jurisdictions that involve either rendering or attempting to render personalized investment advice for compensation will be made absent compliance with applicable legal requirements, or an applicable exemption or exclusion. It does not constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail


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