Retirement planning is full of unique challenges and opportunities, especially for women. Women live longer lives than men, which can bring the risk of outliving their retirement savings. When you also consider career interruptions from having children and wage disparities, the "typical" retirement savings strategies become more complicated. Although the potential difficulties may be formidable, there are time-tested ways to surmount them.

Against this backdrop, values-based retirement planning emerges not just as a new type of planning strategy, but as a beacon of opportunity. Values-based retirement planning goes beyond just the numbers. It's an approach that intertwines personal values, life goals, and financial strategies to craft a retirement as unique as the individual planning it.

In this article, you'll learn how to align your financial choices with what truly matters to you, ensuring that your retirement years aren't just comfortable, but resonate with your deepest values.

What is Values-Based Retirement Planning?

Values-based retirement planning is a holistic approach that integrates your core values and personal goals into the retirement planning process. Unlike traditional financial planning, which can focus primarily on numbers and financial targets, values-based planning emphasizes the importance of aligning your financial strategies with your life's values and aspirations.

At the heart of values-based planning is an understanding that money is not an end in itself but a tool to achieve the life you envision. Sometimes, our planning processes leave us so focused on money that we become too attached to spend it! However, the transition from saving to spending is a critical part of any retirement plan.

We can facilitate the values-based retirement planning process by reflecting on who we are and what we stand for.

Connect with a Wealth Enhancement Group advisor about values-based investing.

How to Identify Your Core Values

Identifying and articulating your core values is a pivotal phase of the values-based retirement planning process. These values can serve as your compass, guiding your financial decisions and ensuring they lead you toward the life you aspire to.

Introduced on the Your Pathways to Wealth podcast by Elena Beckius, leadership coach and senior vice president at Think2Perform, the Values Exercise is a straightforward card-sorting activity anyone can do to start identifying their values.

Image

Source: Think2Perform

The Values Exercise comprises four main steps. First, you'll sort the cards into two piles—keeping those that fit you well, and discarding those that don't. Then, throughout the next three steps, you'll whittle down your values pile until you have five that remain. These final five cards represent your core values, which you can then use to guide the remainder of your planning process.

The Values Exercise is incredibly helpful for articulating your core values, but it can actually be a bit difficult to do towards the end! However, it's critical to persist: By narrowing down your core values and regularly revisiting them after you've completed the exercise, you can keep your retirement plan aligned with your goals.

Strategic Financial Planning: A Values-Based Approach

Living in alignment with your core values means integrating them into every aspect of your life, including your financial decisions. This integration ensures that your spending, saving, and investment choices reflect what's truly important to you. By keeping your values front of mind, you can make every financial decision a step towards your ideal retirement.

But which values-based strategies can you use to get there?

Craft Your Retirement Vision

Crafting a clear retirement vision is an essential step in values-based planning. This vision serves as the foundation upon which all financial strategies are built. The process is straightforward:

1. Define your retirement lifestyle. Begin by envisioning what you want your retirement to look like. Jet-setting travel, time with family, pursuing hobbies, engaging with a close-knit community of like-minded individuals… each of these will require a different planning structure. You need to know what your lifestyle could look like before designing that structure.
2. Align your vision with your values. Once you have a clear picture of your desired lifestyle, examine how it aligns with your core values. If you haven't yet completed the above Values Exercise (or if you forget which values you ended up with), follow the exercise's instructions and write down your results. These values can drive your vision.
3. Strategic planning. Finally, proceed with the nuts-and-bolts of retirement planning, from income to timing, while keeping your vision and values front of mind.

The next three strategies below can be implemented independently or in concert. In any case, remember to look back to your values often to reorient yourself.

Speak with a financial advisor about crafting your retirement vision

Plan for Your Retirement Paycheck

Understanding and organizing your retirement income sources is more than a financial task; it's an exercise in ensuring your future financial flows will enable your vision. Your "Retirement Paycheck" consists of four main pieces:

1.  The assets you save on your own, such as IRAs, 401(k)s, and other investments.
2. The appreciation of those assets, be it from market gains or continued savings.
3. Your estimated Social Security benefits.
4. The taxes that you'll pay on your distributions (which get taken out of your paycheck).

Predicting your future retirement income is difficult, but it ultimately boils down to these four categories. When you take stock of these potential income streams and the expenses that accompany them, consider their financial value as well as their ability to fund a retirement lifestyle that reflects your values and priorities. The assistance of a financial advisor is instrumental to this part of the process.

Balance Risk and Reward

An effectively diversified portfolio balances your risk tolerance and your time horizons. This strategy, a cornerstone of traditional financial planning, can be augmented with a values-based approach to reflect your personal convictions and priorities.

When viewed through the lens of your values, investment choices take on a new significance. For instance, a woman who places a high value on environmental sustainability and regeneration might prioritize investments in companies that report Environmental, Social, and Governance (ESG) metrics. Other socially responsible investment strategies can simultaneously balance risk and reward and contribute to a cause that's close to your heart, making investment planning itself an extension of your values.

Keep in mind that values-based investing doesn't mean sacrificing financial returns for your principles. Many socially responsible investments offer competitive returns, allowing you to work towards your financial goals while staying true to your values. Once you balance your "why" with your bottom line, you'll be well on your way to retirement on your terms.

Timing Your Retirement

Deciding when to retire is a significant decision that encompasses financial readiness, personal well-being, and life goals. These days, retirement isn't a set time or age; rather, it's the start of your life's next chapter, whenever that is. Aligning this pivotal life transition with your core values can allow you to set yourself up for many retirement years filled with activities that reflect your values.

However, keep in mind that women typically live longer than men. This represents a financial difficulty, in that women have more years to fund and are typically doing so while facing other challenges. To overcome this, women need a comprehensive financial plan that outlines when to retire and how to use their Retirement Paycheck sustainably.

Collaborating for Values-Based Success

Values-based retirement planning can be a bit of a journey. Along the path, working with an experienced financial advisor is transformative. Financial advisors bring a wealth of knowledge and experience to the table. While you only approach retirement once, a financial advisor has shepherded hundreds of clients through this phase of their life. Ultimately, an advisor can help you translate your values and vision into actionable strategies, no matter what your financial landscape looks like.

That's where the magic of Wealth Enhancement Group comes in. Our Roundtable™ team of specialists supports our advisors at every turn, providing them with specific expertise to offer you personalized advice from every angle. From taxes to trusts, this collaborative strategy transcends traditional financial planning; it's a holistic, comprehensive approach that empowers you to align your financial decisions with your most deeply held values.

Values-based retirement planning can simultaneously seem both incredibly simple and overwhelmingly difficult. But with the help of a Wealth Enhancement Group financial advisor in a complimentary, no-obligation introductory meeting, you can embark on this journey with optimism.