So many personal finance bloggers that I read each week write about the things you need to do to help you prepare for your retirement. I have done it myself. Those blog posts are very helpful in letting you know what you will need as income, how to estimate your after-retirement expenses, and talk a lot about how you can begin preparing really early in your career in order to maximize your own situation. In the case of younger retirees, the emphasis is usually on financial independence and “early retirement”. For many of us, however, retirement will come along in our later years, the 50’s, 60’s or even 70’s. At 66, I’ve been fully retired for a couple of years.
Rarely, however, do you hear from retirees on the realties of retirement: what do they actually do when they retire? and what did they do right and wrong to prepare for it? Since I am retired, and I’m also a blogger, I thought I’d tell you what I know and have learned as a retiree.
Start planning early
Retirement planning is a long process if done properly. In fact, you really can’t start preparing for it too early in life. Once you start working, if your employer offers a retirement plan such as a 401k (or if you’re self-employed, start an IRA account), my advice is to start participation as soon as you are eligible. If you are young and begin your savings, time will be on your side as your money grows exponentially. The monies you put away may be matched up to as much as 6% and that’s a huge guaranteed return that you can’t find anywhere else in today’s investments. Even if you can’t afford a major lump of savings from your pay right now, match as much or all of the companies contribution. You will be happy you did so and be rewarded in the long run.
While I did start saving early in life, I wish I had put away more in those early years. It’s easy to get caught up in saving for the big events immediately on the horizon…marriage, house, family, car…and to neglect the retirement off in the distance. Don’t let “young you” do that to “older you”.
Prepare for a major transition
Just before I retired, I was very much filled with emotion and trepidation. After all, for many retirees, it’s a huge change from what you have known for most of your lifetime. While most don’t miss the long hours and working someone else’s agenda (whether they be boss or client), most do miss the social interactions and structure of work.
The big question is what will you do with your time? For the past 45 years I had worked heavy duty hours, travelled on business often, and had to plan my free time in advance so I could maximize it for myself and my family. Being retired makes me feel now as if every day is Sunday! In fact, it has become a running joke around my house. Whenever anyone asks what day of the week it is, my response it that it’s Sunday and tomorrow is Sunday, too!
Many retirees I’ve talked to say that retirement is very fulfilling. They have the time to rediscover some of their passions in life and still feel they are contributing in many ways. They are certainly optimistic and not bored as they feared they might be. Believe it or not, retirement takes as much energy and planning as a career does. It is an adjustment, in so many different ways, but it can still be wonderful.
What retirees actually do with their time varies greatly. Some will concentrate on a hobby and maybe even develop it into a business to keep themselves busy or to earn some extra money, if they feel they need to be more comfortable. Others may take on a part time job using the skills they learned in their careers or try something completely new. There’s even a television show called Second Act on RLTV (formerly Retirement Living TV, channels that you don’t know exist until you’ve actually retired! 🙂 ) that helps people over 50 to start a new career or business. In my case, I decided to use my career and life experiences to begin this blog.
Some retirees like to travel, as long as they have the budget and the energy. Others get involved in social activities, especially with the rise of active adult communities across the US. And still others will engage in volunteer opportunities. The possibilities are fairly endless, which can actually be a little overwhelming, which is where that planning comes in. Before you reach retirement, it’s a good idea to think about your priorities and goals, and how you would like to spend your time.
Plan your income and expenses
Retirement usually means downsizing your “lifestyle”, i.e. smaller homes, less on household expenses such as cars, clothing, children’s expenses, and a host of other things. But, it can also mean an increase in some expenses such as medical care as well as inflationary costs for food and utilities. The number one concern of older retirees is about health and how it will affect their finances and lifestyle.
When downsizing, it becomes more important than ever to determine what are your wants, and what are your needs. With a “fixed income” (yes, that is what they call it), you need to be very definite about what you can and can’t afford. Social Security, retirement plan income and investment income (if applicable) probably isn’t going to equal the full-time income from before your retirement. Making these adjustments in your spending, and yes, being frugal and a “super saver”, may become your new philosophy! It has always been a big part of my life so it wasn’t as big an adjustment around my house.
Money aside, healthy retirees can bike, hike, travel, and do many things that they did in their youth but didn’t have time to do it as often as they’d like during their working years. I may not be able to do everything I want with my health concerns, but I am able to stay active. They say 70 is the new 60 (or something like that), but in any event, somehow when you get to my age it doesn’t seem as old as it seemed when I was young!
Spending more time with your family, of course, is one of the greatest pleasures you can enjoy in retirement. If there are grandchildren involved, the retiree will probably dote on them endlessly. I don’t have any as of yet myself, but I would love to spend time enjoying a few in retirement.
From my perspective, I can say that I have a much more mellow side to my personality in retirement. I do enjoy life, and yes, I still do worry a little about the big things like health and controlling my expenses on a “fixed income”. But here’s the thing: if you pay attention to the details, talk with your spouse (if you’re lucky enough like me to have one), and make a plan that makes sense, it somehow all works out. And besides, every day is Sunday, what could really be better than that?
What have you done so far to plan for your retirement? What fears do you have about it? How do you plan to spend your time?