Blissful as retirement can sound when you are overwhelmed by your job, cutting loose from the work world can have its own anxieties.
Contentment isn’t assured. As with the rest of life, you’ve got to work for it.
Having a well-considered plan, some solid resources and a bit of self-knowledge are keys to ensuring you get the experience you hope for in this life stage.
Read on to learn what retirement experts told us when we asked for some of their best advice for clients.
1. Picture the life
Sarah Hadlock, owner of The Business Guides in Port Townsend, Washington, urges clients to start picturing retirement in detail while they still are working.
“Do you want to fully stop working or gradually phase out?” says Hadlock, an accounting and tax expert and a certified financial planner.
Retirement, to many of us, means having the freedom to do what you want every day. But you can do that in a number of ways, Hadlock tells Money Talks News.
You might, for instance, keep working and gradually phase into retirement. This immediately improves your work-life balance while you continue earning, saving and enjoying health care benefits before becoming eligible for Medicare, the federal health insurance program that primarily services people age 65 and older.
Certified financial planner Jon Robertson of Abacus Planning Group in Columbia, South Carolina, urges clients to think through what they want in retirement and how to achieve it.
“What are you retiring from, and what are you retiring to?” he asks.
Some of his clients can’t think beyond their desire to stop working. Others have retirement all mapped out. But even if you have a couple of elements of retirement figured out, go further and dig deeper, Robertson tells Money Talks News.
Hadlock and Robertson both stress the need for purpose in a retiree’s life. A vague plan to “golf” or “travel” likely isn’t enough to keep you busy or happy.
2. Get your finances in order
Even if you’ve never been a budgeter, you probably understand intuitively that retiring requires knowing how much money you’ve got to live on.
Robertson has a back-of-the-envelope exercise he uses with new clients. Here’s how it works:
- Look at last year’s tax return to see what you made.
- Subtract the taxes you paid.
- Figure out what you paid toward debt.
- Compare your bank balance with the same time a year ago.
“This method could be a good starting point for thinking through your cash needs,” he tells Money Talks News. “For example, if you made $100,000, paid $20,000 in taxes, increased your bank account by $5,000 and decreased debt by $5,000, you probably spent around $70,000 last year.”
One big decision that will affect your budget is whether you pay off a home loan before you quit working. We talk through that decision in “Should I Pay Off My Mortgage Before Retirement?”
3. Find a community
After your work buddies are out of the picture, you may find you miss the feeling of community you shared.
We are social creatures, after all. The ability to bask in others’ company and share our highs, lows, opinions and triumphs is part of being human.
“In the workplace — even virtually — we’ve had a built-in community that we engage with day to day,” Hadlock says. “Retirement can mean that that community suddenly stops.”
Don’t count on a spouse for all your socializing.
“It can stress a relationship to become a partner’s sole social interaction in retirement years,” Hadlock says.
Other family members or your place of worship often fill this need, Robertson says. Or look for community in your neighborhood: perhaps a cycling club or book club, or with friends made while volunteering or at the gym.
4. Create a dependable income stream
Sleeping peacefully at night in retirement cannot be overrated. Knowing that you have what you need to cover bills staves off worry over withdrawing retirement investments during an economic downturn.
Steady sources of monthly income after retirement can include:
- A pension
- Income from rental properties
- An annuity
- Social Security
For many, it may make sense to delay claiming Social Security as long as you can — until age 70, ideally, when benefits reach their maximum potential — so Social Security benefits can keep growing until that age.
A gradual phased retirement, Hadlock points out, can provide a steady stream of income while you start enjoying a semi-retired life and makes it easier to keep Social Security benefits keep growing.
5. Cut the kids loose
Entering retirement with an adult child who depends on you financially may not be sustainable.
Sometimes, dependents are just part of the picture. But when money is tight, Robertson says, ask yourself if you can realistically continue supporting someone else.
If grown kids are capable of independence, start by setting boundaries. Make a plan, with dates and deadlines, explaining it clearly and well in advance.
Take a year or two to sever financial ties as you support grown children to develop their confidence and independence. We have more guidance in “6 Ways to Help Adult Children Without Going Broke.”
Also, if debt complicates your retirement picture, why not seek free advice from a certified credit counselor? Money Talks News can help you find one in its Solutions Center.
6. Scrape off the barnacles
Retiring involves facing big changes, and some of them are internal. Even as you celebrate freedom from work, you probably are conscious of how your lifespan is growing shorter.
What can you do about it? You can open your arms to this next phase of life by letting go of the small resentments and bitter expectations, no matter how justified, that we accumulate like barnacles on a boat’s bottom.
Maybe your body doesn’t work as smoothly as it once did, and maybe it hurts. Nearly two-thirds of people over age 65 have multiple chronic health conditions, according to federal data.
It’s also likely that you missed some great chances along the way, and maybe you feel you weren’t appreciated as you should have been. Such is life.
Mourn these losses and learn to let them go. They sap the optimism and energy you’ll need for fully relishing this new phase of your life.