Bob and Katie Carlson* couldn’t believe the good fortune they’d had in the stock market, and at our first meeting in my office, they talked rather sheepishly about a dream they could now actually see coming to pass: a comfortable retirement. Certainly, both had done a good job of saving through their employers’ 401(k) plans over the years, and they lived modest lifestyles. Now both 60, their thoughts turned increasingly to exciting trips they wanted to take and spending more time with their young grandchildren, especially before Katie’s chronic health condition got any worse in the years to come.
Like Bob and Katie, many Americans in their 50’s and early 60’s find they’re able to realistically think about retirement. College expenses for the kids are mostly done. Friends start taking the leap to their own retirements. Even when a career is satisfying, the daily grind any job requires starts to be (maybe) optional, while other life goals like spending time traveling or with family seem more necessary. Being “fed up with work” is not going to sustain a fulfilling retirement, but it’s not the worst excuse for starting the retirement process!
In Bob and Katie’s case, many of the financial and emotional pieces of retirement started to line up right about the time when it became possible to quit working. But for many other people, retirement is an amorphous blob of dreams and anxieties with not much more concrete thought to it than, “I’d like to stop working by the time I’m 65.”
To be successful at retirement, you need to purposefully choose your retirement path. Just as you chose a career for your working years, and you likely chose and planned for a spouse and children, retirement is that next phase of life that requires you to decide what you want. What is it that retirement means to you? You can avoid the question, but facing it head on is the only surefire way to get what you want.
Just as smart-aleck advisors will tell you the time to begin saving for retirement is when you get that first paycheck as a 16-year-old, the time for planning your retirement was surely many years ago, too bad for you! Being more realistic, you probably need 3-5 years to get your retirement ducks in a row. Bob and Katie found they needed time to prepare emotionally for the end of their working years, a facet of retirement that many ignore in the rush to get their financial affairs in order. Other financial tasks that take some time include paying down debt and lining up healthcare coverage, and you may need time to phase out of your role at work, leaving it to colleagues to carry on (or hire your replacement).
When is a less-than-ideal time to plan for retirement? When you are considering an early-retirement offer on the table (good!) or your job is about to be eliminated. Although you can accelerate all these decisions, doing so under stress, with fewer options due to the compressed timeframe, is not the best way to start retirement. Plan ahead and leave yourself enough time!
Gauge your emotional readiness by reviewing these factors:
Don’t rush or pooh-pooh the need to think through your emotional readiness for retirement. For more detailed planning, consider the resources available through the American Psychological Association at: http://www.apa.org/pi/aging/lifespan.pdf
On the financial side, you’ll need to consider the following factors:
Did you notice I didn’t even mention investments and how to turn those into income? That’s a critical piece of the puzzle, but most advisors (and many good websites) can help you figure out the mechanics of investments. Far better that you figure out the weighty answers to the above financial items.
Getting yourself ready for retirement takes some time and effort, but the reward is a successful transition from the world of work to the joys of new endeavors in retirement. As Bob and Katie found, the chance to travel and spend more time with grandkids was well worth the time we put in upfront to chart the retirement course.
* I’ve changed their names, though they are real clients of mine.
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