Retirement is about saving but also spending

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The transition from work to retirement is more — much more — than simply turning off the alarm clock and letting your workplace wardrobe go stale.

There’s also the matter of money.

Matt McKellar, the founder and CEO of MyICON, a Kirkland financial-planning and wealth-management firm, tells his clients to make sure they can support their future lifestyles “with a high degree of confidence.”

Among other things, he pays close attention to a client’s cash flow in retirement. His approach can be summarized with three bullet points.

• Project your spending and income across all stages of your retirement.

• Organize your assets into a series of “buckets.” The first bucket helps pay for the first seven years of your retirement, while the second bucket covers any shortfalls for the next seven years. You can tap the third bucket at 15 years and beyond. Invest the first bucket into low-risk securities that keep pace with inflation. Assets in the second bucket need to beat inflation a little bit. The third bucket can hold more aggressive investments with higher risk and higher returns.

• Learn how to spend your money after a lifetime of saving it. Making the adjustment can be surprisingly difficult, McKellar said. Sometimes he has to give his clients permission to spend their own money.

[Related: Pensions provide a welcome cushion as Seattle couple eyes retirement options]

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