You’ve probably heard that we Americans are largely doing a poor job of saving for retirement. A 2016 report by the Economic Policy Institute puts it in stark terms. By 2013, the mean investment wealth for families in their late 50s was about $164,000, which would generate close to $8,000 a year in retirement. When you combine that with the average Social Security benefit of under $17,000 a year, most are woefully unprepared to stop working in their 60s.
Despite this news, many of you have done fantastically well in saving for your future. You have reached financial independence and are prepared to live within your means using your portfolio and other income sources. The years right after you stop working should be among your best, but many end up with a substandard quality of life for nonfinancial reasons. Consider these factors when mapping out a fulfilling life after work.
A Good Reason to Get Out of Bed. While you’re working, life has its demands and a rhythm. Retirees often initially revel in their freedom. You can sleep in any day of the week for perhaps the first time in your life. All the hobbies you didn’t have enough time for like hiking or golfing can command your attention. But after six months of this, you may bore of your pastimes. This is where the “why” of your life comes in. After you no longer work and your children are grown, what is the purpose of your life?
Without a “why” in retirement, you are more likely to suffer from health problems, depression, financial mistakes, and even a lower life expectancy. Don’t confuse a routine with purpose. Instead think proactively about what activities and people keep you more plugged into life. We’re fortunate in Boulder County to have hundreds of learning and volunteer opportunities including CU Boulder’s senior auditors program available at a nominal fee. Take advantage of them.
Health and Wellness. You may have the financial wherewithal to explore the world, but it makes little difference if you have tired of new experiences or have little energy left to fuel your explorations. Again, Boulder County has a leg up on wellness as many of us moved here for its outstanding outdoor recreation options. There are also many healthy food choices at local grocery stores and restaurants. Though many of us who eat healthily and exercise regularly may forget our medical checkups. Also, make sure you take advantage of the early “go-go stage” of retirement and with a focus on health and wellness you can often extend this time filled with adventure.
Stay Connected and Foster New Relationships. One thing that people often miss after they stop working is the comradery of coworkers. Without that built-in social network, many retirees particularly men may feel disconnected from others. It’s important to get going on nurturing and building other connections while you’re still working, so that upon retirement you don’t find yourself lonely or overly dependent on your spouse or partner for social connections. The longer your retirement, the more you should continue to foster new friendships as your old friends may no longer be available.
Picking the Right Living Option. You may want to live in the house you raised your children in for the rest of your days. Alternately, a 55 and over community may appeal to you with its social aspects and amenities. You may even think about moving to another state with a more moderate climate. There is also the option of independent living within a Continuing Care Retirement Community, that includes assisted living and nursing home care in the same community. You should dream with your partner about your preferred living situation that will support your social and physical needs.
The financial planning industry has largely been remiss in helping clients work through the nonfinancial transitions in the life after work. Consider engaging your planner in these areas to help guide you through the softer side of retirement. After all, we all want our financially successful clients to have fulfilling and satisfying lives as well.
For more information on this topic consider the book that inspired much of this column: Fourth Quarter Fumbles: How Successful People Avoid Critical Mistakes Later in Life by Dennis Stearns, Certified Financial Planner.