At Keen Wealth, we believe that retirement planning isn’t just about our clients’ finances – it’s about our clients as people too. I know that there’s a popular image of retirees clocking out on their last day of work and slipping right into a hammock on a beach. But I also know from my firsthand experience working with retirees that the actual transition is never that simple, even with sound finances in place. Too many seniors think that making a budget based on an annual withdrawal plan, and deciding when to take Social Security and Medicare, is all there is to it.
Of course, it’s incredibly important that retirees prepare financially by discussing these and other money matters with their fiduciary advisor. But you also have to prepare emotionally for retirement.
Well, recently I came across an excellent article on this subject from the good folks at Age Wave, a company that studies how an aging population affects society. Their research and analyses have been very valuable to advisors like myself as we help the large “baby boomer” generation ease out of the workforce and into retirement. This study breaks down how to prepare emotionally for retirement into five stages: Imagination, Anticipation, Liberation, Reorientation, and Reconciliation. I highly recommend reading the entire article, but today I thought I’d give a brief overview of these five stages and how they relate to your retirement plan.
If you retired tomorrow, what do you imagine your life would be like? How would you fill the time you used to spend working? Would you work part-time? Start your own business? Volunteer? Play golf seven days per week? See the world with your spouse? Move to Florida and park yourself on the beach?
Age Wave says that the Imagination stage should start anywhere from 6 to 15 years before retirement. But note that as retirement gets closer, 56% of people feel like they’re not “on track” for the retirement they want. The earlier retirees hone their vision of an ideal retirement, the better they are able to prepare emotionally.
If you can see your retirement destination just beyond the horizon and you can’t wait to fly right into it, then you’re in the Anticipation phase. At this point, you and your financial advisor are probably double-checking all your savings and investment plans, and making any adjustments to account for new lifestyle goals. You also might be getting deeper into an interest or hobby you plan to focus on once you do retire.
Worry can be a part of this stage too. As retirement gets closer, it becomes more real. Because of this, the Anticipation stage can trigger some renewed commitment to planning and saving: 72% in this group polled by Age Wave are investing in a 401(k); 81% are putting money in a separate savings account for retirement; 62% have determined the income they need in retirement. Sometimes, retirees get so locked into this savings mindset that they end up living too conservatively for their own good.
For retirees who might have been late to the Imagination stage, Anticipation can be the final push they need to prepare emotionally, and to make some lifestyle decisions such as moving out of the family house into something smaller, and maybe looking for a part time job or volunteer position.
Over the years, many clients have told me that the day of their retirement was one of the happiest, most freeing – most “liberating” – days of their lives. Overnight, all the hassle and worry of 9-to-5 responsibilities are gone. No more meetings with the board. No more project deadlines bearing down. No more quarterly objectives to hit before the end of the month.
Unfortunately, like that quick hit of joy we get splurging on a luxury purchase, the Liberation stage is short-lived. Many retirees are surprised to discover that Liberation, in and of itself, just isn’t enough: you have to retire TO something that will keep you active, engaged, and happy.
You wanted to fix the roof? It’s fixed.
You wanted to play more golf? You’re on the tee every morning.
You wanted to see Paris? You went. So … Now what?
This is where things can get tough for folks. Even the best retirement to-do list rarely has enough dreams and activities to keep a person occupied for twenty or thirty years.
Age Wave discovered that at the Reorientation stage, “many retirees find themselves retiring in front of the television” – 43.5 hours per week on average. That’s more time than some of those folks used to spend at the office! I don’t even want to know what the internet or smart phone numbers might look like!
Ask a retiree struggling with Reorientation how he or she is spending time, and “I’m keeping busy” is a common answer. But retirement shouldn’t feel like busywork, and it shouldn’t turn into one long Netflix binge. That’s a recipe for depression, stress, and poor health. This is the time to put your lifetime of experience and skills to work in ways that make YOU happy. If you can feel yourself slipping into this rut, think outside the box a bit to break out. Try something you’ve never done before. Expand your social circle. Take some chances and you’ll find the world outside is still a lot more interesting than the one in front of you on a screen.
Age Wave found that it can take retirees up to 16 years to reach this final stage of contentment, in which retirees are at peace with what retirement has to offer them. Reports of depression and worry begin to drop, although in some cases those feelings are replaced with sadness as retirees start thinking about their legacy planning.
In the end, Age Wave concluded that 65% of the people it studied were “living their dream in retirement” by the time they reached Reconciliation, and a full 75% said they were enjoying retirement “a great deal.” Those are the kinds of numbers we’re trying to boost every day at Keen Wealth, with planning designed to aim our clients toward financial security and emotional satisfaction.
Bill Keen is a CHARTERED RETIREMENT PLANNING COUNSELOR℠ and independent financial advisor with more than 25 years of industry experience. As the founder and CEO of Keen Wealth Advisors, a registered investment advisory firm, he specializes in providing personalized retirement planning designed to help people thrive before and during their retirement years. With a passion for educating others, Bill regularly blogs about retirement planning, hosts the podcast Keen on Retirement, and has contributed to U.S. News and World Report, Reuters, Wall Street Journal’s Market Watch, Yahoo Finance, and other publications. Based in Overland Park, Kansas, Bill and his team work with clients throughout the greater Kansas City area and across the nation. To learn more, connect with him on LinkedIn or visit www.keenwealthadvisors.com.
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