I think about retirement a lot. Partly because it is my job to help people prepare financially for retirement, but also because it is something that I hope to do someday myself. I have also reached an age where I know a lot of retired people. My parents, other relatives, and most of my neighbors are retired. Many of my clients are retired. And my friends are either retired or are getting serious about preparing for it. Thus, I have had ample opportunity to observe how different people approach retirement and what they do once they retire. One of the key lessons I have learned from my observations is just how important it is to think about retirement from multiple perspectives, not just the financial aspect of retirement savings.
Retirement is a broad topic, so I've developed a three-part summer article series to examine different aspects of retirement. I am hoping these articles will give you food for thought about retirement, which we can discuss together during our next meeting. Part One starts with rethinking your expectations and ideas about retirement. Here are some of my thoughts.
Revisit your expectations of work in retirement.
One aspect of retirement you should consider is whether you even want a traditional retirement in the first place. A Federal Reserve Board study1
found that one third of retirees eventually ended up going back to work after initially retiring. If your mantra is "I work, therefore I am" or you can't picture yourself spending all day on the beach or the golf course with little else to do, consider how work might play a role in your version of retirement.
Reimagine your planning process for retirement.
- Continue to work full-time for as long as that makes you happy. Some people could easily retire and simply choose not to, for example, Warren Buffett, Oprah, and Bill Gates. As the saying goes, "If it ain't broke, don't fix it."
- Work part-time or remotely. Maybe you want to scale back your workload but stay in the working world to a certain extent. Consider all options for making your work more flexible in terms of time and location.
- Turn your passion into a side hustle. Regardless of whether your passion is playing in a band, woodworking, or anything else, you can stay productive working on it. Whether the gig needs to turn a profit is totally up to you
Particularly when you are decades away from retirement, it can seem like the finish line. But rather than being the end of your story, retirement is more appropriately seen as merely another chapter in your story. So envision carefully what that next chapter should look like. Take some time to consider answers to questions like:
- Where will I live?
- What will I do on a daily basis?
- Who would I like to do those things with?
Retirement can also be viewed as an extension of your career. Remember when you first started out? You probably researched the career and considered things like your aptitudes and the career outlook. Perhaps you had a mentor to guide you. Think about retirement in the same way. Do the research. Reflect on your aptitudes again. Talk with people who have successfully retired. What did they struggle with? What worked for them? Take time to regularly consider, discuss and revise your ideas about this important next chapter in your life.
Remain flexible in your retirement.
Nobody will know for certain how satisfied they will be in retirement until they experience it. Some people will naturally fall right into the rhythms of retirement. Others will have to tweak and adjust their original thoughts or find other pursuits. For example, my dad is on his HOA's Board of Directors, teaches safe driving classes to seniors, serves as the local handyman for his elderly neighbors, and prepares free tax returns for seniors through AARP. I don't think he planned on doing those things when he first retired, but he has figured out how to fill his time with worthwhile pursuits that leave him fulfilled.
As always, I am here to discuss your retirement aspirations with you, even beyond the financial aspect. Retirement will look different for each of us, and I encourage you to spend time to make sure it will be the retirement you want when it gets here.
In next month's article, I will highlight common behavioral biases we all share that can make retirement more challenging. Oh, and in case that's not exciting enough, I will also tell another Rudy story!
If you have questions or if you would like to discuss retirement planning with me, you can e-mail me at firstname.lastname@example.org
or call (520) 204-1058.
Matt Haertzen, CFA, CFP
Jacobs, Lindsay, and Suphanit Piyapromdee (2016). "Labor Force Transitions at Older Ages: Burnout, Recovery, and Reverse Retirement," Finance and Economics Discussion Series 2016-053. Washington: Board of Governors of the Federal Reserve System