What good is money if you’re not enjoying it?

Never get so busy making a living that you forget to make a life. This week we look at a hypothetical man struggling to accept retirement and make serious changes to protect his future.

The situation

Byron, 58, has been in Colorado for the last 25 years and divorced for the last 20 years. He has been a pilot for almost 30 years and is pension eligible in eight months. Over the past six to eight months Byron has seen the writing on the wall at work and realizes his time may be limited. He has seen several colleagues with his level of tenure pushed out for younger, cheaper talent.

If he retires in January, his monthly pension will be $1,370 per month. Due to company troubles, the lump sum option has been taken off the table and his only option is the monthly payments. Byron also has $302,452 in a 401(k) account, $125,029 in his Roth IRA, $201,932 in a traditional IRA, $989,864 in a brokerage account and will receive approximately $250 a month from a previous employer’s pension at age 65.

Byron’s entire retirement savings is 100 percent in stocks. His current Social Security estimates are $2,532 at age 66 and $3,225 at age 70. Byron owns his home valued at $300,000 and has $76,000 remaining on the mortgage.

Byron’s biggest challenge is accepting he is financially ready to retire. “My work is my life, I have worked since age 13. Stopping all of a sudden is not easy for me.” He is worried about the future because prior to now, all he has known is work and has not made social activities a priority. His main question is how to maximize his investments in the event the pension plan falls through.

Byron doesn’t spend his money on travel, possessions or entertainment so his calculations have shown that if he pays off his house, he can live on $30,000 per year after tax. When Byron is forced to retire, he plans to move to a warmer climate. He has no children or family in Colorado, but has a brother and friends in Arizona.

The recommendations

Byron has done extremely well saving and investing in his lifetime, but it is time for him to make a life and protect his future. His portfolio is at a very high risk invested all in stocks.

A prudent person needs more diversification to protect their portfolio in the event of sudden change. Byron knows he doesn’t need to earn much on his money to provide for his frugal lifestyle, and he admits that his portfolio is invested in this way partially due to greed.

Byron is fearful to retire, knowing he will never have the opportunity to earn at this rate again, yet is investing it in an area with the highest risk. This is only adding to his fear and needs to be addressed by a professional. Byron should speak to a therapist to help him envision his dream retirement. Byron has worked hard for this money and deserves to enjoy it.

Naturally, Byron will wait until January to make any changes in his work. Once he is pension eligible he will have the luxury of putting in his notice at any time.

Byron estimated needing approximately $30,000 after taxes to live on. Even if his pension is eliminated, he has enough assets and anticipated Social Security, to live on $36,000 per year or more. This will allow for some additional fun. This may not be possible however, if he does not diversify his portfolio and there is a large market downturn.

Byron can afford to hire a professional money manager and give them the mandate to invest conservatively so he can take this worry off of his shoulders. He doesn’t need the money, so he might as well wait to claim Social Security until age 70. He will need to draw a larger amount of his assets over the next five to 10 years until he is able to claim Medicare and Social Security, and then he will be able to draw less on his reservoir as he ages.

Byron is in the process of updating his wills and power of attorney while taking advantage of his company’s pre-paid legal plan. He is wise to utilize all company perks to the fullest while he is still employed.

You can have all of the money in the world, but what good is it if you’re not enjoying it? If Byron conquers his fear of change in identity, he can afford to fly high in life, and anywhere he likes for fun, not work.

Pam Dumonceau has 24 years of experience and is the principal of Consistent Values, a registered investment advisory firm in Greenwood Village.