Why You Need More Than Just a Financial Plan When You Retire
- While breaking free of the pressures of work can sound blissful, research shows that many people are surprised to find their new retired life boring and even depressing.
- To help avoid this happening to you, plan on spending some time preparing for the emotional transition from working life to retirement.
- Some things you can do to help relieve the stress are to create a daily schedule, broaden your identity, grow your social circle, and create a retirement paycheck.
After you’ve taken care of your financial planning, it’s natural to look forward to the pleasures of retirement. No alarm clocks. No back-to-back appointments (other than for things like lunch and golf). No pressures!
Well, that is undoubtedly the side of retirement that many anticipate. But what looks idyllic on the outside can feel surprisingly different after an initial honeymoon period. Why? Well, there can be a thing such as too much freedom, especially when it happens all at once.
When everything familiar is gone, it can be uncomfortable at best or depressing at worst. Statistics unfortunately back that up too; a study by the Federal Reserve found that one-third of men who retire choose to return to work. [i] And as Dr. Randall Paulsen told Harvard Health, “taking it too easy can be just as bad as overworking.”[ii]
Fortunately, just as you prepare financially, you can prepare emotionally, too, for the transition from working to retirement. Here are some steps we recommend for a smoother transition:
Create a daily schedule. When you’re working, no schedule at all sounds divine. But after you’re past that initial honeymoon phase, that same freedom can start to feel more like a prison. Without a schedule and stated goals, it can be hard to know how to fill your day, creating a layer of stress that can be difficult to eliminate. Some people turn to food, alcohol, or too much television, starting their retirement off on the wrong foot.
A good strategy is to create a general schedule for yourself. First, set some goals and establish priorities. Improving physical fitness should be on most lists since maintaining our health benefits all of us in so many ways. But set other goals too. Do you want to get organized, improve your home or maybe start volunteering? Or get more serious about an activity or hobby? Or perhaps you have a business idea to pursue. Whatever your objectives, write them down.
Then, create a general schedule to help you move toward those goals. Again, “general” is the key; you’re not aiming for precision or pressure. You don’t need to set an alarm clock, and there’s nothing wrong with scheduling a daily nap, either.
For example, a newly retired person might opt for this type of schedule: allow yourself a couple of hours for breakfast and time to catch up on emails and the internet. Then maybe take a walk with your dog. After lunch, work on a project of your choice for an hour or two. Don’t forget enjoyable exercise—schedule that in too. Maybe another walk, a hike, or a bike ride? Leave time for cooking so you can prepare a healthy meal. Then maybe reserve television for the very end of the day, after dinner, so you don’t get caught up watching too much.
Bottom line, you don’t need to be rigid, but having a general schedule can help you bring back some structure and feel more purpose. But if an opportunity arises to have some fun, remember it’s perfectly fine to drop your schedule and run with it. You’ve earned that!
Another increasingly common strategy is to look for less stressful or part-time work. That way, the new venture will replace the structure of your current occupation, but you will still enjoy more time off.
Broaden your identity. Whether we realize it or not, most of us tie our identity to our job or business. When we leave that behind, we literally have to redefine who we are. This process is not easy and can evoke some strong feelings, such as insecurity and uncertainty.
Here, your best defense is awareness. Expect to experience these feelings and begin preparing. That may mean thinking about your life without your profession or business being an integral part.
For example, try less “talking shop” when socializing. If you meet someone new, try not to talk about what you do for a living, at all. It can sound simplistic, but you want to start viewing yourself as more than an attorney (or nurse or business owner). Then, when that’s part of your past, it’s not felt as such a big loss.
Grow your social circle. When you retire, you’ll usually get an outpouring of good wishes, so it can be easy to think that relationships will continue. But in many cases, busy lives get in the way, and many of your work relationships will fade away over time. This can create a significant void. Or even if you maintain work relationships, you may find you have less in common with your ex-workmates.
To plan for this, you need to expand your social circle outside of your work. That means making an effort to meet new people. So dust off your social skills and reach out, keeping in mind that many people are experiencing the same thing and welcome new contacts.
Technology can be a great help, too: you can also connect with like-minded people through social networks or Meetup groups.
Create a retirement paycheck. Even if you’re well prepared financially, when your paycheck stops, it can create stress simply because you can’t monitor your monthly expenses the same way you have in the past. This stress can be especially pronounced for those who have been good savers all their lives.
One way we help our clients smooth the transition is to arrange a monthly deposit from your savings into your checking account, with taxes automatically withheld, in the amount of your ideal monthly budget. This strategy keeps the process of paying your monthly bills more familiar, which helps emotionally.
Also, a bit of good news: we often find that most of our clients are relieved to see that their accounts still grow–especially early in retirement.
In addition to these four steps, there are a few other insights we’ve gleaned from our work helping clients transition successfully.
- Your transition might occur later. Many of our clients find the first several months in retirement to be busy as they start tackling all the items they never had time to complete. Then, after this initial catchup phase winds down, some of this new reality sets in. We’ve sometimes seen these clients then become bored or depressed. So beware that it might not happen right away, and continue to prepare.
- Relocating can help. We’ve also noticed that clients who move to a different region after retirement seem to do well on the whole and often escape these issues. It’s likely because the move occupies their time and they are forced to make new friends and get to know the area. A move requires you to reinvent your daily life from the ground up, which can be a very positive thing as you transition from working life to retirement.
Final Thoughts. As you can probably see, financial planning is not the only preparation you need for retirement. So we recommend you use the year or two before retirement to create a transition plan so you can ease into retirement with more satisfaction and less stress.
The opinions voiced in this material are for informational purposes only and are not intended to provide specific advice to any individual. Consult your legal, tax, and/or financial advisor to determine what is appropriate for your situation.
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