We often discuss preparation tactics for retirement. We include information on ways to prepare financially and even ways to ensure you’re creating a generous amount of support for your heirs after your passing. However, one thing we don’t talk about enough is how to mentally prepare for retirement.
Like many things in life, preparing for retirement requires mental and emotional preparation as much as financial planning. While you may daydream about the day you can live out your golden years in work-free bliss, you may find that you miss the routine you once found so mundane.
It’s important to consider how you would like to spend your time in retirement, just as much as it’s important to know what location you want to spend it in. Taking the time to come up with goals, social engagements, and travel that you want to incorporate into your golden years will set you up for a smooth transition and happy retirement.
A successful retirement is not merely measured in financial terms
Even those who retire with small fortunes can face boredom or depression. There is also the always looming fear of drawing down their savings too fast. How can new retirees calm these worries?
Two factors may help - a gradual retirement transition and some guidance from a financial advisor.
An abrupt break from the workplace may be unsettling
As a hypothetical example, imagine a well-paid finance manager at an auto dealership whose personal identity is closely tied to his job. His best friends all work at the dealership. He retires, and suddenly his friends and sense of purpose are absent. He finds that he has no compelling reason to leave the house and nothing to look forward to when he gets up in the morning. Guess what? He hates retirement.
On the other hand, if he prepares for retirement for years in advance, he can find many options to create a slower transition that will enable him to maintain social connections and an active lifestyle. He may consider exploring an encore career, contemplate self-employment, or decide to spend his time volunteering. If he does this, he can retire with something promising ahead of him. If he broadens the scope of his social life so that he can see friends and family regularly and interact in different settings, his retirement may also become more enjoyable.
The interests and needs of a retiree can change with age or as he or she disengages from the working world. Retired households may need to adjust their lifestyles in response to this evolution.
Practically all retirees have some financial anxiety
Financial anxiety relates to the fact of no longer earning a conventional paycheck. You see it in couples who have $60,000 saved for retirement; you see it in couples who have $6 million saved for retirement. Their retirement strategies are about to face the real-time test. All that careful planning is coming to fruition, but there are always unknowns.
Some retirees are afraid to spend
Many retires fear they will spend too much, too soon. With help from a financial planner, they can strategize a withdrawal rate.
While no retiree wants to squander money, all retirees should realize that their retirement savings should cover their lifestyle costs. Being miserly with retirement money contradicts its purpose. According to the Social Security Administration, the average 65-year-old may have a retirement lasting approximately 20 years. So, why not spend some money now and enjoy retired life?
Broadly speaking, our spending declines as we age
The average U.S. household that has an 80-year-old head of household spends 43% less money than one headed by a 50-year-old.
As we grow older, we realize there is less that we need. In our older years, we may already have the material objects we desire. Our time and our interests shift from physical items to time spent with loved ones and have experiences we will remember. As we age, we find less use for the material and focus our remaining time toward the things that money cannot buy.
Retirement challenges people in two ways
The obvious challenge is financial; the less obvious challenge is mental. Both tests require us to use sufficient foresight and dedication.
When you are planning your retirement, it may be fruitful to create a plan for hobbies and travel. Include specific things that you have not been able to engage in due to your rigid work schedule. Ensure you’re saving appropriately so your finances will allow you to indulge in all the activities you desire.
Throughout your lifetime, cultivate the lifelong relationships you want to maintain regardless of your status as a working professional or retiree. Participate in hobbies that you can practice despite your age and engage in interests outside of work. Living a well-rounded life as a non-retiree will encourage you to continue that trend to your retirement years.
Remember that you do not need to accomplish everything at once. You do not need to travel to every destination you’ve dreamed of before you retire. Save both your experiences and your money so that you have the type of retirement that enables you to continue to see and do new things.
The bottom line
Preparing for retirement can be a daunting task both financially and mentally. Like all hard things, face the challenge head-on. Plan and save for the future you want to provide for yourself. When you are creating your retirement savings plan, remember to start dreaming about how you will use the money you are saving and put plans into motion to make it a possibility.
Don’t forget to ask for help along the way. The seasoned advice of a financial advisor will help you make the hard decisions and navigate your path toward a happy, healthy, and financially successful retirement.