Tips for your clients to have a successful retirement

When we examine our most successful clients, we see behavior patterns. Of course, there are always exceptions to the rule, but here are a few characteristics most prevalent among those best prepared to retire.

The most common characteristic of successful retirees is they treat their savings as a bill. Many would never think of missing a mortgage or utility payment. People who retire successfully treat their savings like a creditor; it cannot be unpaid. Their savings are often deducted straight from a paycheck or automated in some way.

This principle is articulated well in the book "The Richest Man in Babylon."

A part of all you earn is yours to keep. Few people understand that they must pay themselves before paying their creditors. Those who think they will save what is left at the month's end usually find nothing to save.

Another commonality is home ownership. We have noticed that successful retirees either pay off their homes or pay them down and refinance, drastically improving cash flow. A few of our most successful clients do rent, but only sometimes. Rent never goes away and can increase with inflation.

Lately, we have seen many successful retirees leave the state. They use their home equity to live well in a place where the cost of living is less.

Occasionally, we all come across extra money. Perhaps a purchase costs less than we thought, or we forget a check coming our way. Successful retirees see these mini windfalls as additional savings, not more stuff to buy. Poor savers always spend extra money.

Successful retirees invest. You cannot invest without taking risks. In our experience, very few people achieve a comfortable retirement by investing only in low-risk securities. Government bonds, CDs and money markets can be a part of an investment portfolio, but be careful not to use only low-risk investments. Investing and risk are different sides of the same coin.

Successful retirees invest in themselves. This takes on many forms. They read, travel and have hobbies they are passionate about. This may lead to better earnings potential before retirement and even fuel the drive to retirement.

Another essential element of investing in yourself is earning an education. You might expect to hear that all our wealthy clients have college degrees, but that's false. The common characteristic here is that successful retirees have learned how to do something few people can; they have gained a skill. People with formal educations tend to earn more.

Not all wealth is earned. Some experience a windfall event, but that produces a pattern of itself. We have noticed those who have already created wealth and then experience a windfall tend to hold on to that wealth. Clients who inherit wealth and have never managed to earn it themselves usually waste it quickly. This is true for many who experience windfalls, lotto winnings, inheritances and athletic contracts.

In the end, remember that a successful retirement has more to do with how you behave than how much you earn.

John Mills is a registered investment advisers and certified financial planner. Reach him at 707-254-0155 or MillsWealth.com. Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Strategic Wealth Advisors Group (SWAG), a registered investment adviser.