Retirement “ain’t what it used to be,” or likely isn’t what we thought it would be. Playing golf, walking on the beach, sipping martinis by the pool, and traveling will be only part of the retirement picture. What else will define these final decades of our lives?
A quick history on the evolution of retirement: In the 1930s, the government was looking for ways to convince older men to retire. Social Security was enacted as an enticement to lure workers into retirement. The retirement age was set at 65 because of the predominant belief that our mental acuity and physical stamina begin to slow at age 65. The average life expectancy was age 63. If you were lucky, you might have 5 to 10 years in retirement. In the 1950s, in an effort to convince workers to retire and purchase retirement products, the financial industry started marketing retirement as an individual’s rightful reward for his/her years of labor and loyal service.
Today, average life expectancy is close to age 80 and many individuals are living healthy, active lives into their 90s. The possibility of 15 to 25 years of retirement has us rethinking the traditional view of retirement. Many of us are choosing to work longer for our financial well-being, for the well-being of our relationships, and for the well-being of society.
Prior to starting retirement, you need to have a plan. Consider the questions below. As you ponder the questions, remember, you have 168 hours to fill each and every week. How will you allocate your time between Family/Friends, Work/Career, Downtime, Sleep, Health/Fitness, and Personal Growth?
At what age would you like to retire?
Do you have a contingency plan if you can’t work as long as you would like at your current position?
Do you want to work part-time in retirement? If so, what do you want to do?
Will you miss your co-workers or interaction with clients?
Have you considered what it will be like to not receive a paycheck? How would inflation or a recession impact your mind set?
For the last 40 years, much of your identity was tied up in your job. You were a teacher, a doctor, a VP of your division, an executive director, a lawyer, a CPA … How will you define yourself in retirement?
Leisure and Activity
How will you fill your days once you retire?
What will your days look like 2 years after retirement?
Do you plan to move, remodel your home, or purchase a vacation home?
Do you plan to relocate? If so, have you made summer and winter visits to where you plan to live?
How will you keep your mind stimulated?
Do you want to travel?
What type of car do you need and how often will you need to make this purchase?
Do you plan to make a major purchase? Boat? Snowmobile? RV? Harley?
Based on your family history, do you anticipate any major medical expenses?
Do you have gifting plans for charity, children or grandchildren?
Relationships: Have you …
Talked openly with loved ones about your goals, dreams and interests for retirement?
Discussed with your spouse your expected schedule and daily activities in retirement? “In sickness and in health, but not for lunch!”
Considered how the various aspects of your retirement might positively or negatively affect the relationships you have with your family and friends? For example, do they know how much time you want to spend with them? Is this a significant increase in comparison to how much time you spend with them now?
Considered how poor health, extreme inflation or a severe market decline may impact your retirement?
Other questions to consider
What would you do if you had unlimited time and financial resources?
How would you live if you knew you only had 5 to 10 years left?
What would you most regret if you died tomorrow?
What did you like to do after school?
What are some skills people compliment you for that you could teach to others?
What would you like for someone to do for you?
What would you like to do for someone else?
Who would you like to spend time with and why?
It would be fun to . . .
What does happiness mean to you?
What are your hopes, dreams, and goals?
And lastly, what will get you out of bed in the morning?
Once you have some ideas, take your retirement for a test drive. Live on your retirement budget for 3 to 6 months. Plot out an ideal week and month. And remember, “Retirement” is not a “one and done” decision; all of us require time and experimentation to find the proper balance in our lives.
This information is believed to be accurate but should not be used as specific investment or tax advice. You should always consult your tax professional or other advisors before acting on the ideas presented here.