The plan seems simple: work until age 65 and then retire and enjoy the good life: golfing, travel, gardening, being a grandparent, and sleeping in. This may be what you’ve been looking forward to for the last forty or so years, but you could be in for some big surprises. There are quite a few important facts about retirement that are no one talks about.
Many people have trouble adjusting when they exit the working world and try to begin a life of leisure. Here are five things you need to know that most people don’t talk about related to retirement:
For many people, their identities have become wrapped up in what they do for a living. When their careers end, unless there is something else to fill that space, depression can become an issue.
A report from the Institute of Economic Affairs shows that retirement may increase your risk of clinical depression. Two of the biggest contributors to that statistic are social isolation and inactivity. That’s why so many experts on the mental health aspects of retirement recommend coming up with a plan for retirement that goes beyond your finances.
Few people like to talk about depression. So, it is no surprise that it is one of the things that no one tells you about retirement. When you retire, what will motivate you to get out of bed and do something?
To ward off feelings of disconnect and despondency:
- Stay in shape. Remaining active as you age helps your physical health and your mental well-being.
- Get up at the same time each day and develop a routine. Retirees fare better when they have a plan for the day – even if it’s just meeting up with friends or hitting the golf course.
- Give back to others. Seniors who volunteer have a greater feeling of mental well-being than those who don’t.
- Stimulate your mind. Retirement doesn’t have to be all leisure. Some of the happiest retirees continue working a reduced schedule or pursue higher education.
- Retire to something, not just to get away from the daily grind: here are 120 ideas for what to do in retirement.
- Find purpose. Here are 3 ways to find meaning in retirement.
A study from the Pew Research Center found that the divorce rates are climbing for Americans who are age 50 or older. Among U.S. adults ages 50 and older, the divorce rate has roughly doubled since the 1990s.
One of the reasons for the increase in divorce among retirees may be that we’re living longer. When you reach retirement age, you may have decades of life ahead of you. Many people decide they don’t want to spend that time with someone they don’t get along with anymore. That, combined with a reduced stigma surrounding divorce – both from a religious and societal perspective – means people are less likely to stay in a marriage they no longer find fulfilling.
However, it’s important to consider the financial aspects of divorce at, or near, retirement. Older divorcees tend to be less financially secure than married or widowed adults (especially women). In some cases, the later a woman divorces, the more likely she is to need to continue working full time later in life. Suddenly, the nest egg that you thought was sufficient to support a comfortable retirement doesn’t stretch far enough because it needs to support two separate households.
When creating your retirement plan, be honest about your future prospects. If you fear that a break-up could possibly be in your future, look hard at what that might do to your finances.
Some people leaving the working world feel like they’ve lost their status, identity, social support, or their purpose. In some cases, these feelings of loss lead to an increase in alcohol consumption and even alcohol abuse. Some studies have even shown that drinking alcohol is increasing among the elderly.
In general, the CDC recommends limiting drinking to no more than one drink per day for women and two drinks per day for men. But even that amount can be too much for some. As people age, they often become more sensitive to the effects of alcohol, and heavy drinking can make some health problems – such as osteoporosis and high blood sugar – even worse. Drinking and taking certain medications – even over-the-counter medications or herbal remedies – can be dangerous or even deadly.
Traditional retirement planning recommends aiming for 80% of your pre-retirement income each year to maintain your quality of living in retirement. The thinking is that once you retire, certain expenses – including housing costs, commuting, dining out, payroll taxes and retirement savings – will decrease.
However, households end up spending more than what they’ve budgeted for, especially early in retirement.
That overspending is not typically on necessities – such as food and health care – but on discretionary spending, such as travel and maintaining a more expensive home than they need. It’s understandable that after a lifetime of working, new retirees may want to treat themselves a bit. However, overspending in the early years of retirement can significantly increase your chances of not having enough to last a lifetime.
Even the best-laid retirement plans can come unraveled if you aren’t proactive about setting a reasonable budget for retirement spending and sticking to it. And the more detailed the better.
The Budgeter in the NewRetirement Planner enables you to predict expenses by category and vary your expenditure over time. This tool makes it easy to get started planning your future finances, and it addresses many details not covered in other tools. This can mean a more reliable plan for your future.
With all of the data on depression, drinking, divorce, and overspending in retirement, it’s easy to believe that retirees are some of the most miserable people on the planet; that’s far from the truth. Age Wave and Bank of America Merrill Lynch recently partnered on research that found that a majority of retirees (93%) feel their life is as good or better than it was before they retired.
What’s not surprising about that finding is that money is not the primary factor in a happy retirement. Regardless of net worth, most retirees enjoy the increased flexibility and freedom that retirement brings.
No matter how little or how much money they have, 86% of retirees report enjoying inexpensive leisure activities, such as reading a good book, hiking a nearby trail, and spending time with their grandchildren.
In an article for Inc., author Jeff Haden summarized some of the behaviors and characteristics that lead to the happiest retirement, according to financial advisor Wes Moss’s book, You Can Retire Sooner Than You Think. Among those:
- Happy retirees own homes averaging $300,000. That’s less than the current average sales price for new homes in the U.S., so owning luxury real estate is not necessary.
- Happy retirees own their homes or are about to pay off their mortgage. Owning your home outright provides a sense of security and frees up money for other purposes.
- Happy retirees have 3.5 core pursuits. That’s activities and interests they love to pursue, which might include volunteering, traveling, sports or other hobbies.
Financial planning for retirement is essential, but just as important is planning for the aspects of retirement that money can’t buy: social connections, a sense of purpose, and passions beyond your career. As you near retirement age, start focusing on how you’ll use your new-found flexibility and freedom. You may encounter a few unexpected twists along the way, but the more you plan for the “soft” side of retirement, the better prepared you’ll be to confront those inevitable bumps in the road.