How do you imagine your retirement? What words come to mind? In a 2018 study, researchers asked these same questions to get a feel for how participants imagined their life in retirement.
What we know is there are a lot of Americans currently in retirement, but significantly more will be entering retirement in the coming years and decades. Figures suggest 10,000 baby boomers are turning 65 years of age every day. We also know that for many soon-to-be-retirees, they have not saved nearly enough. In fact, two-thirds of Americans don’t contribute any money to a 401(k) retirement account at work or any retirement account.
Based on these grim statistics, how do you think survey participants viewed their own retirement? The responses were surprisingly consistent. Of the 990 adults who were interviewed, only 27 words were needed to make up half of collected data. More surprisingly, the ten most frequent words respondents used to describe retirement accounted for almost one-third of all responses. Yes, just ten words. What you’ll find in the ten words below is that most of them are not related to money or investing. What research has found is that much of retirement happiness has little to do with financial wealth. There are many tried and true non-financial factors that contribute to retirement happiness. Sign-up for the Retirement Satisfaction Webinar to learn about these non-financial predictors of retirement success.
Here are the ten most popular words used to describe retirement, and what you can think about and plan as you approach retirement:
This doesn’t surprise me. When we’ve had a bad day of work and we’re driving home, what do we wish for? We just want to relax. Relaxation is often the quintessential word we equate to retirement. While de-stressing and relaxing is positive and often needed, what I’ve seen in my retirement financial planning firm is that a little can go a long way. Too much “relaxing” becomes counterproductive and can lead to boredom and malaise. Before you enter retirement, imagine both how you will relax but also how you can remain active and engaged. What hobbies do you have or can you start that will give you purpose and meaning? One of my clients worked seven days a week for several decades. After he sold his company and retired, he needed a new passion. For him, it was training for and completing Ironman Triathlons! Not exactly what most people would consider to be relaxing, but for him it was the perfect fit. Enjoy your time off, but find your new passion.
We all want to be happy, of course. It’s nice to see that even though many Americans are underfunded for retirement, they still envision a happy retirement. Money doesn’t buy happiness – we’ve heard that all too often – but I would argue that without a baseline of income, it’s hard to be happy. If you haven’t saved enough and you are still a few years away from your desired retirement age, this is your window and now is the time to save as much as you can. Happiness, at least how many of my clients define it, is having peace of mind and financial security. It can also help with the third most popular word…
Of course “travel” was going to make the list! Travel and retirement go together like peanut butter and jelly. If you are like most Americans and want to travel more when you retire, there a few things to consider. If you are going to be away from your home for longer periods, consider renting it to earn money to partially offset the cost of your travel. You could also consider doing a “house swap” with someone in an area you want to visit. I’ve known people who have done this with great success. You also need to think about your health. If you envision gallivanting all over the world, you’ll want to feel good and have energy. This means thinking about your health now, before you retire. I’ve had clients get into the best shape of their lives as they approach retirement because they wanted to feel vibrant and ready to tackle the next phase of their life.
Not much to say about this response…
Having more time to do the things that matter most to you is the hallmark of retirement. Most pre-retirees envision using some of this newfound time with their family. What issues should you be aware of as you approach retirement? Based on my work with retirees over the last two decades, I’ve found that family can be an immense source of joy – family trips, spending time with grand-kids, and just being more available. Family can also increase expenses. If you have kids or grand-kids that can’t afford to join you on a family vacation, will you pay their way? After a layoff, will you invite your kids to move back in? These are real examples I’ve seen with my clients. Without proper planning, these are the kind of events that can financially derail a retirement plan. It’s human nature to want to help family, but sometimes helping can hurt. Run the numbers yourself or work with your retirement financial advisor to see just how much help you can provide without it impacting your own security.
Who doesn’t hope to have a little fun in retirement? You’ve worked hard for three or four decades so why not have some fun. But sometimes when I ask pre-retirees what they will do to have fun, I get a blank stare. What does it mean to you to have fun? Fun doesn’t just happen. You need to create an environment for fun to exist. Be as specific as you can and try to determine what fun looks like so you can pepper in activities in retirement that make you happy.
I suspect that success here is some combination of financial and personal success. Just like “fun” from above, success doesn’t just happen. Here is a question I like to use: “Imagine you are three years into your retirement and you tell me your retirement has been a success. What had to have happened over those three years for you to say that to me?” It’s easy for time to slip by and for you to wake up and have a decade of your retirement gone. What makes a retirement successful is forethought and a strategy. We all define success, and certainly retirement success, differently. The onus is on you to discover what retirement success means to you. I’ve found that those who get clear on this before retirement have a much better transition into this phase of their lives.
When your boss demands a project be completed over the weekend or when you are stuck in traffic on the way home from the office, the promise of freedom must ring loud. Retirement freedom can be an amazing outcome – it can give you the time and space to do the things you really want and that give you meaning. Freedom can also create tension, uncertainty and boredom. Why? Before retirement, we have a schedule and a purpose to our day – we get up at the same time, get ready, drive to the office, have people and/or projects for which we are responsible, and have co-workers with whom we interact. Once you retire, the predictability and purpose of the day goes away. Once retired, it is up to you to create a new schedule and vision for how you will use this new time and freedom. Don’t feel like you need to have your day blocked out from morning until night, and don’t feel like you need to have all the answers before you retire. Sometimes it takes a few months into retirement to get a feel for it. However, it won’t hurt to start thinking about how you will use your new freedom.
You can’t talk about retirement planning unless you talk about money. One of the biggest fears of pre-retirees is not knowing if they have enough money. The only way to effectively determine if you have enough to retire is to do the analysis – either by yourself or with a retirement financial advisor. My suggestion is to hire somebody to help you. There are so many variables to consider that it makes sense to work with someone who has experienced hundreds of retirements (i.e., working with clients who have retired) and has seen what works and what doesn’t than trying to go it alone. Either way, make sure your portfolio is invested appropriately for a retirement of three or more decades, you are taking out a safe amount of income each month, and you are considering all the various expenses and inflation in your calculations. Once you go through this process, you’ll feel better about retiring or you’ll discover you need to work an extra year or two. Either way you are better off knowing this now rather than after you leave the workforce.
This one word sums up everything we desire from retirement and life. We want to feel fulfilled. Many clients transition smoothly into retirement and feel fulfilled while others struggle. Think about what you enjoy about your pre-retirement life – maybe it’s the camaraderie of your co-workers, the consistent schedule, the feeling of responsibility or purpose – and think of ways you can incorporate these things into your retirement. This might include volunteering or sitting on the board of a non-profit. Maybe it’s starting a new business or writing the novel you’ve always thought about. Fulfillment looks different for everyone. What does it look like for you?
As a fun pre-retirement exercise, what are the top ten words you would use to describe your retirement? And if you want the most from your retirement, be sure to sign-up for the Retirement Satisfaction Webinar to learn about the non-financial predictors of retirement success.
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