A lot of people talk about their bucket list — the myriad of experiences we hope to be able to complete before we ultimately … well, you know. In my work as a financial advisor, clients often describe their bucket-list wishes in the context of their retirement plans. In fact, I believe that this is built into the architecture of the American view of what we can look forward to in retirement.
As a society, we have come to believe that you should work for 30 to 40 years or more to reach a point in time where you will be able “retire” and then have the opportunity to relax and pursue all of the things you have dreamed about wanting to do your entire life. Retirement is the ultimate destination on the horizon that we are working toward. At the end of the rainbow lies the pot of gold that contains our lifetime treasure of bucket-list experiences.
In my work with clients, I like to turn this concept on its head with something I call “Bucket List Living.” Bucket List Living recognizes that our lives are the journey, and the true destination is our “expiration date” or death. It’s unavoidable! Rather than delaying our enjoyment of life to a date way off in the future, we should reward ourselves with enriching, enjoyable and life enhancing experiences all along the way.
Bucket List Living doesn’t negate retirement as a concept. Instead, it changes the focus so retirement is not the trigger point to start checking items off our bucket list. Rather than delaying our most desirable experiences toward the statistical end of our life expectancy, we pull more of those experiences forward.
The concept extends more broadly than just bucket-list experiences. It’s really about living your vision of your best life in all facets. Who do you want to be? What do you want to learn? What mark do you want to leave? What are your health and wellness goals? Let’s make all of this part of your financial plan. And just as important, let’s pull forward as much of those experiences so we can make life more rewarding sooner.
The bucket-list mindset
The volatile investment environment of 2022 and the resulting decline in investors’ portfolio balances has led many folks near retirement to reconsider their retirement date and to conclude that it may be further off than they had hoped.
While this can naturally lead to feelings of frustration and anxiety about how much longer it will take them to reach their “golden years,” it makes the concept of Bucket List Living even more relevant today. I talk to clients about what life-enriching experiences we can pull forward into their near future.
For many of our clients, travel ranks high on the list but the costs of pursuing more travel before retirement could mean less travel later in life or a lower annual budget. One way to address this from a more positive framework is to unlink the idea of increased travel being triggered by retirement.
We ask them, “Would you be willing to work longer if you experience more enjoyable experiences now? Additionally, if you could incorporate more travel and leisure into your current lifestyle, could that make your career or business less taxing or less stressful?” In my experience, this is a worthwhile tradeoff for a lot of folks.
To fund one’s bucket list experiences, we also talk to clients about generating possible alternative income sources so that their retirement savings or annual contributions to investments don’t have to be compromised.
One idea is for clients to rent out their home through short-term rentals, for a portion of the year, to fund their travel budget. Another concept is to do a home-swap using a membership club that pairs homeowners in different parts of the world. For example, you exchange your home in California for a month with a family who has a home in Italy.
Another idea is to possibly incorporate a vacation-rental home into one’s investment portfolio. If a client owns a property in an area they enjoy traveling to, they could rent out the property for a good portion of the year through a short-term rental program. This could provide them with a source of passive income and appreciation, while they can potentially cover the costs (or more) for their own personal use.
Some of our clients are using or are contemplating some of these strategies and see them as very attractive options. But, it’s not all about travel.
Some of our clients see philanthropy as part of their bucket-list desires. Yet many people may feel that they may not have the resources to be as philanthropic as they would like. With Bucket List Living in mind, we find that we are able to uncover creative solutions for charitable giving through the implementation of tax-reduction strategies for clients.
As an example, we have a client who sold their residence that had been in their family for many decades. The appreciation over the years was tremendous and so were the tax consequences upon sale. We were able to significantly reduce the client’s tax liability by setting up a charitable trust into which they gifted a large portion of their sale proceeds. The client received a substantial, immediate tax deduction, significantly reducing the tax bite they otherwise would have faced. In addition, the client will receive a lifetime income stream from the trust and the remaining assets will go to charities of their choice upon their death.
We have had other clients who recently sold businesses set up and contribute to donor-advised funds. This can also result in significant tax savings and provide clients with a “private foundation” from which they will be able to implement their philanthropic goals on an annual basis.
Living your bucket list
These are just some of the creative approaches to Bucket List Living that we are employing with our clients to bring more fulfillment and joy into their lives. We find that this mindset resonates really well for many people as they think about both their life goals and their financial plans, especially today.
Brad Levin, CFP, CMT, is a managing director and senior wealth advisor at The Colony Group. He brings 30 years of experience as a financial advisor, helping clients to save and invest for the future, prepare for the unexpected and pursue their vision of their best life. He is based in Calabasas, Calif.