How much will you actually spend in retirement? That depends on a lot of factors,…
Retirement can be a time of joy, relief, and relaxation after a long career. Many people look forward to leaving their job behind and finally having time to themselves. In retirement, you no longer have the physical and mental toll of a stressful job, and you get to pick and choose how to spend your days and nights. You also have total flexibility: whatever your plans are can be altered and rescheduled as you choose. You can take advantage of opportunities as they arise. You are no longer forced to travel, dine, or go to the park during peak times since your schedule is wide open.
But retirement is also a major change, and every change can be filled with uncertainty. With some planning, you can avoid some of the common pitfalls and make the transition smoothly. Here are a few suggestions.
1. Have a retirement vision. This means you should have an overall plan for what you want to do after you’re no longer going to work every day. What activities do you want to fill you day? Maybe there’s a hobby you want to pursue, places you want to travel to, or a business you want to start. Catherine Allen, co-author of Retirement Boom: An All-Inclusive Guide to Money, Health, and Life in Your Next Chapter, calls this a “walking meditation”: take a walk in the woods by yourself and brainstorm what you want this chapter of your life to look like. Many people come up with surprising new ideas that they hadn’t thought of before.
Another way is through journaling: in the quiet of the early morning, for example, write down any ideas that come to mind without judgment or censoring. A benefit of this method is that writing things down helps you make your ideas more concrete, and gives you notes to refer back to later.
There’s no need to fill in all the details, and obviously your plan isn’t etched in stone. But with a general idea of what your retirement lifestyle will look like, you can determine how much income and savings you will need. A life filled with exotic trips will cost more than one spent working around the house. If you run the numbers and find a shortfall, you may have to adjust your expectations accordingly and check again. It’s an iterative process. Or you might have to downsize your housing or develop an additional source of income.
2. Be wary of obstacles to your vision. There are many ways your retirement plans could be hindered or even derailed. Your grown child needs help paying a debt or taking care of their kids. You get hit with an unexpected medical bill. Your health suddenly declines. Or that class in Europe you were planning to take is sold out or no longer offered. Some of these obstacles you have control over, others not.
For the factors you can control, it’s best to have a strategy in advance for dealing with them. Set firm boundaries and stick within them. Help your kids, but don’t jeopardize your own retirement in the process. Running out of money is a big concern to many retirees. With proper withdrawal rates, asset allocation, and possibly guidance of a trusted financial advisor, this risk can be minimized.
3. Take a preview of retirement. Having a mental vision of retirement is nice, but nothing beats actual experience. If you’re planning to move after retirement, take one or more extended trips to your intended destination and have a good look around, as a prospective resident, not a visitor. Visit during different times of the year if possible. Talk with people who live there or have recently lived there.
If you plan to pursue a hobby or volunteer work, start in your spare time now and see how you really feel about it. If you would like to start a business or consultancy, tap into your contacts and begin laying the groundwork. Some people take a paid or unpaid sabbatical from their job a few years before retirement. Phased retirement also is an increasingly popular option, if your employer allows it.
4. Change your mindset. The retirement process can be disconcerting for many people. If you’re accustomed to being in a prestigious position at work with many responsibilities, it can be jarring to find yourself suddenly sitting at home. Simply getting used to not going to work every day can be a big change. There are many habits you’ve cultivated over the decades around your work life. You will need to be psychologically prepared to give up those habits and start new ones.
5. Include your spouse. Your retirement will have a big effect on your spouse and family. Successful retirees have discussed their retirement plans with their close family members and developed a common vision of life after retirement. On the other hand, if they haven’t discussed this with their spouse, this is often a source of discord.
Discussions should include the lifestyle aspects of retirement, not just the financial aspects. Spouses often have different views of the ideal retirement. One spouse may be ready for retirement, but not the other. You may want to travel, while your spouse may prefer to spend time with friends or grandchildren. Maybe you could join a travel group or travel with friends, while your spouse spends time with her social circle.
Working out compromise solutions now, if needed, can help avoid conflicts in the future. A counselor or retirement lifestyle coach may be able to help.
Just being together much of the time may require some adjustment. While you and/or your spouse are working, you likely have limited time to spend together. After retirement, your spouse may not be accustomed to your being at home so much. You may need to negotiate schedules and how to divide space in the house.
Here’s a panel discussion about navigating the emotional transition to retirement.