Over the past 24 years, I’ve spoken with many people whose retirement worries are crippling. They’re often paralyzed with fear about the what-ifs of retirement:
- What if I run out of money?
- What if I need more money for the things that I want to do?
- What if inflation is out of control?
- What if the market tanks?
- What if I get bored?
- What if I don’t feel comfortable withdrawing the money I need to live on out of my retirement accounts?
Every one of these retirement worries is completely understandable, even common, so if you’ve got similar pangs, please know that you’re not alone.
Retirement is one of the largest paradigm shifts of your life, on par with starting school, getting married, or becoming a parent. Transitioning from working five days a week to not working at all can be challenging in and of itself. People often worry about how they’ll fill the days. Then you add the financial shift: you spent decades contributing to your retirement accounts, and now it’s time to withdraw from them. It can be quite jarring, but it doesn’t have to be overwhelming.
While everyone has their own vision for what retirement planning will look like, there are common themes. I’d like to share some of the top retirement worries I’ve heard and tips to address them.
Retirement Worry #1: What if suddenly being retired is too jarring?
If you’re unsure about “all in”, ease in.
Let’s face it, when you’ve worked in a career for 30-40 years, you find that it becomes integral to your identity. Suddenly, you’re not Stan the Union President or Barbara the Bank Manager and that can be unsettling, especially when you combine that with the extra 40-50 hours of free time you’ll have each week. Many of my clients have voiced this as their #1 retirement worry.
If you’re not ready to go all in, you can ease in. You can dial back your hours. You can work part-time. You can transition to working from home. There are plenty of ways to manage that. I have a handful of clients who are dentists who went from working five days a week to working three. Other clients have decided not to work in February and March because they want to spend that time in Florida. And, thanks to the pandemic, many businesses have become more flexible and allow their employees to work remotely. See if that’s a possibility for you. That way you’ll still have your hand in, which helps fill some of the days, and you’ll continue to receive a stream of income, which means you are taking less money from retirement investments.
I have another client who was considering buying a condo in Florida and moving when she retired but she was quite nervous about it. I suggested, “Try it before you buy it,” and she looked at me like I had two heads. I then explained, “Rent a place there for a few months and see if you like it. Give yourself enough time to really get the feel for the life you’re envisioning for yourself in Florida. It might turn out that it isn’t for you. And this way you’ll learn that without having fully committed. So if you hate it, you can easily pivot and if you love it, you can make the bigger commitment and buy a new home. Selling a property is a lot harder than buying a property — even in a booming real estate market — so you want to make sure it’s the right move for you.” Trial runs can help you troubleshoot and sharpen your retirement strategy before you feel “pot committed”.
Retirement Worry #2: What if we can’t take the togetherness?
Follow your mom’s advice and take turns.
Also in the vein of “it’s better to know now,” if you’re married, it’s important to know how you and your spouse are going to function together in retirement.
There’s a saying that we joke about around here that “retirement is twice the husband and half the money.” Our advice? If you are both working full-time and have two incomes, avoid retiring at the same time. If possible, have one retire first and try it out for a year. Taking turns entering retirement gives you each the space to adjust and develop a new routine, rather than you both suddenly having loads of time on your hands and not constantly getting in each other’s way. The first spouse will have time to develop a routine independently. Figure out how they’d like to spend time going forward. Then the other can retire and make the same adjustment. You might learn that one of you wants to continue working part-time. The other may want to explore new places, volunteer, take up a new hobby or spend more time on an established one (I’ve got tons of clients who are now obsessed with Pickleball, which I thought had something to do with sandwiches). Taking turns will also help you financially. If one of you retires and the other continues working for a year or more, it means you’re still receiving income and adding to your retirement account balance in the process.
Retirement Worry #3: What if it turns out I don’t have the money to retire?
Map it out.
When I talk with my clients whose main retirement worry is whether or not they are able to retire, we sit down and develop a strategy, with the money and resources that are currently available to them. One of the first steps in this process is writing down a budget. When you physically write your budget, you can see the opportunities or roadblocks. Look at your actual expenses and all of the extra things you’re spending money on and make some decisions. What expenses are necessary? Which ones will disappear over time? For example, if you have seven years left on your mortgage, you know that expense will be going away. That opens up possibilities. There are also dependent expenses, which can vary wildly. Some are expected and planned. For example, if you still have kids in college, you’ll likely need to save a little more. Others are what you could call “grandfathered expenses” and these can and should be addressed. Expenses like your child’s car insurance or student loans. I’ve got three daughters, and they’re all on my cell phone plan. But they’re still in middle and high school, so it makes sense that I foot that bill. It’s easy to see how you’d end up continuing to pay these bills because you always have. But how long should you cover these expenses? I can’t tell you how many times I’ve written out a budget with my clients and found out that their 30+-year-old children are still on their cell phone plans. And the bills are astronomical! At some point, you’ve got to wean them off your checkbook. If you’ve got a son who is an orthopedic surgeon, it’s time to kick him off your plan.
Retirement Worry #4: What if I don’t want to retire?
Don’t retire from something; retire to something – your way.
Again and again, the retirement worries “I love what I do” and “I never want to retire” arise around retirement conversations. Ok, fella. The long and the short of it is, you know you’re going to have to stop at some point. But that doesn’t mean you are condemned to spend your days growing stiff in a rocking chair. Retirement is not your final chapter; it’s your next chapter. Did you know that Frank Sinatra released “My Way” at the age of 60? As a financial guy, I’m thinking they ought to update those lyrics. “The end” is certainly not “near” at age 60. You’re likely not “facing the final curtain” for a while yet. And hopefully, you’ll have a retirement strategy that leaves “too few [regrets] to mention”. With today’s life expectancy, many people are in retirement longer than they are in their working careers. So, if you’re not ready to retire from something, change the narrative to you’re retiring to something. Hit the golf course (or join a Pickleball league), try your hand at painting, and add more stamps to your passport. The world is your oyster.
My dad, who still lives in Ireland, retired from Guinness where he’d worked since graduating college. His retirement lasted about a week before he took on a consulting job. While he’s technically retired from his main job at Guinness, he is essentially working part-time in the consulting industry and spending a lot of time with his grandkids. Now, he’s been “retired” for almost 40 years, which is more than a decade longer than his time at Guinness.
At the end of the day, it’s completely normal to feel anxious about this significant change in your life. But, when the what-ifs of retirement are keeping you up at night, reach out to professionals who can help put your retirement concerns to rest. When clients come into South Shore Retirement Services, they not only work with me, but with an entire team of financial professionals. Our “all hands” approach, where we work in concert with each other was developed so our clients’ “what ifs” are addressed, so they don’t have to worry about running out of money and can ultimately enjoy the retirement they’ve always envisioned. All under one roof, we have experts in investment income and growth, tax strategies, healthcare, and legal. When our team sits down with clients and crafts a comprehensive plan, we work to assuage any fears and help them feel confident about this new milestone. They understand that they have a team behind them who will work to ensure their retirement strategy is dynamic and adaptable to weather any storm, whether it’s a shift in the markets, a change in the client’s health, or even wanting to figure out what the pickleball rage is all about.