Learning to Be a Retiree

Practice Makes Perfect When it Comes to Retirement
Most of us really look forward to the idea of well-deserved, unstructured free time. A time to do exactly what we please when we please. Until we get it.

Half of retirees reported being somewhat or not at all satisfied with their retirement.
A retirement satisfaction survey from EBRI found that half of retirees (51.4%) in 2012 reported being somewhat or not at all satisfied with their retirement. Some retirees underestimate how long it takes to adjust to a new lifestyle; others miss friends from work; still others find themselves with too much free time.

The question is, without your career to define you, what will? Finding the answer takes preparation and thought. While the financial component is critical to a sustainable retirement, so is your quality of life. Too few people consider the psychological factors, which include losing your career identity and spending more unscheduled time with your spouse, as well as the need to find ways to stay active.

It’s crucial that would-be retirees invest in their social, physical and psychological needs as well as their financial ones. And that takes planning. Here’s what we mean.

All or nothing?
It turns out you don’t have to go all-in on retirement. You can transition into it, while still working. In the years before you plan to retire: Practice. Try out aspects of your proposed retirement and see if they are fulfilling. You may find you prefer a sort of hybrid retirement that perfectly blends work and leisure into the ideal mix for you.

There are benefits of continuing to work while you try on retirement for size. The additional income can help you:

  • Avoid drawing down your retirement savings, allowing time for potential future growth.
  • Pay down unnecessary debt or splurge.
  • Stretch your retirement savings. Even a part-time salary will reduce the amount you’ll need to withdraw. For example, making $10,000 a year is enough to replace a 4% annual withdrawal from a $250,000 portfolio.
  • Delay taking Social Security, until age 70. Each year you wait after full retirement age adds 8% to your monthly benefits.
  • Reduce out-of-pocket healthcare costs since you’ll still be covered under employer-subsidized insurance.

To get into the right mindset, first figure out if you really want to retire and what that may look like. You’re seeking fulfilling activities that also fill up your time in meaningful ways. Having an emotional connection helps motivate you and creates a sense of contentment. Allow yourself the luxury of introspection and give yourself permission to enjoy your 60s, 70s and beyond using the money you’ve saved specifically for this purpose.

A change of pace
Of course, everyone’s vision for retirement will be different, and decisions about this phase of life should be based on your financial situation and comfort level. If continuing to work while dipping your toe into the retirement waters appeals to you, run the idea past your financial advisor. He or she can help you determine if a more gradual approach could help you adjust emotionally and financially, so you can achieve the ultimate reward: a happy, fulfilling new life.

Accentuate the positives
Eight tips to find contentment in retirement

  1. Treat your body well with exercise and nutrition
  2. Focus on the good
  3. Practice empathy, kindness and generosity
  4. Be a good friend
  5. Maintain meaningful relationships
  6. Volunteer
  7. Pursue your passions
  8. Meditate

Next steps
Meet with a professional to discuss:

  • Retirement income planning
  • Social Security strategies
  • Testing retirement scenarios

Sources: T.Rowe Price; Forbes; The New York Times, “Thriving at Age 70 and Beyond”; Employee Benefit Research Institute, “Trends in Retirement Satisfaction in the United States: Fewer Having a Great Time,” April 2016; U.S. News and World Report, “How to be Happier in Retirement”; Hartford Funds/MIT’s AgeLab

*Material provided by Raymond James for use by its advisors.
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