Retirement isn’t what it used to be. Historically, individuals worked until their mid-60s and only expected to live for five or ten more years. Now, retirees are spending entire chapters of their lives in retirement—anywhere from ten to thirty years, depending on their health.
So, what does this mean for today’s retirees? Simply put, that there is considerably more to plan for. Not only do longer retirements require more income, they pose a number of personal challenges if not properly thought through. Unfortunately, many individuals spend more time planning what they’ll do on vacation than what they will do to feel fulfilled and satisfied for this chapter of their lives.
Life After Work
What many people don’t realize is just how many changes we will encounter once we leave the workforce. Despite its challenges, getting up and going to work each day provides us with:
- Predictable patterns and routine
- A sense of identity
- Social interaction
- A sense of purpose and fulfillment
- A sense of accomplishment
The key to a fulfilling retirement is replacing these fundamental aspects of your life outside of the workplace. Some retirees continue working until an older age, some plan a staged retirement that allows them to continue working full-time, and others still opt for the more traditional route.
When evaluating your retirement readiness, the emotional implications are no less important than the financial ones. All the money in the world won’t guarantee a happy retirement.
In fact, your personal vision for retirement should inform your financial readiness to do so. Would you rather work for five extra years and be able to afford all the trips and activities you see yourself experiencing, or sacrifice the extra income and live a less lavish lifestyle for an early retirement?
With these types of considerations in mind, you’ll need to map out how you will spend your time, what you’d like to accomplish, and what that all looks like from a fiscal standpoint in order to make the personal and financial ends meet.
Also See Harbor West related article: What You Need to Know About Estimating Taxes in Retirement
How Will You Spend Your Time?
So many pre-retirees are preoccupied with the sovereignty they will have over their time once they leave work, they fail to consider just how they will spend it all. It is precisely for this reason that a record number of retirees struggle with depression than ever before. They have failed to account for how many changes they would experience. They find themselves feeling lonely, isolated, useless, and directionless once the novelty of their newfound freedom wanes.
In order to replace the sense of identity, purpose, and the socialization you received in the workplace, you’ll need to answer some serious questions:
- Socialization: How will you replace the social aspect of work? Where will you find a sense of community and belonging?
- Routine: What will you do when you wake up in the morning? How about after that? Some experts even recommend taking a retirement “test drive” for a couple weeks to see how you feel about being away from work.
- Purpose: What will give your life purpose? Is it something like volunteering to support a cause you are passionate about or helping to care for grandchildren?
- Cognitive and Physical Challenge: Research has indicated that retirees who keep their brains and body in use ultimately live longer and healthier lives. Many retirees will use their physical activities, such as daily trips to the gym or playing tennis, as anchors for the remainder of their schedule and routine. In addition, overcoming challenges and making progress helps to build a sense of accomplishment.
- Identity: Who does the retired version of yourself look like? For individuals deeply tied to their work, retirement can feel like entering a completely new life. The important thing is to keep an open mind. Retirement can be a time to explore new passions or reveal new sides of yourself you haven’t discovered.
Making Ends Meet
Of course, even the best laid plans will only be possible with proper funding. Once you have an idea of how you’ll spend your time in retirement, you can begin to craft an estimate of your financial need. At this juncture, you and your financial advisor can work together to determine a timeline, risk management plan, and course of investment action to get there.
At Harbor West, we believe strongly in the fact that retirement is not just about crunching numbers—it’s about determining how those numbers can help fund a rewarding life experience. If you or a loved one are preparing for retirement and need help determining how to generate predictable income from your resources, we’d love to help. Schedule a call today to see if Harbor West could be a good fit for you.
Disclaimer: This information is provided for general purposes and is subject to change without notice. Every effort has been made to compile this material from reliable sources; however, no warranty can be made as to its accuracy or completeness. Before acting on any of the information, please consult your Financial Advisor for individual financial advice based on your personal circumstances. Neither Harbor West nor Geneos Wealth Management, Inc. provide tax or legal advice. Harbor West is a division of NorthEast Community Bank. Securities and advisory Services offered through Geneos Wealth Management, Inc. FINRA/SIPC Investment Advisory and Financial Planning Services offered through Geneos Wealth Management, Inc. Investments are not FDIC Insured. Investments are not deposits of the financial institution and are not guaranteed by the financial institution. Investments are subject to risks including loss of principal.