Why “How Much Do You Need to Retire” is the WRONG Question!

You might think that the most important retirement planning question is: How much do you need to retire.  While knowing the answer to this question IS critical, there is something else you need to figure out first.

You need to know: What do I want to do in retirement?

How much do you need to retire?
Here are 9 tips for figuring out and focusing on what you want to do in retirement:

1. Knowing What You Want to Do Informs How Much Do You Need to Retire

Before you know how much you need to retire, you have got to figure out what you want to do with this time of your life.  If you know what you want to do and where you want to do it, figuring out how much you need gets a whole lot easier.

A few examples:

  • Writing a book takes less money than traveling the world.
  • Going back to college costs more than reading library books.
  • Golfing costs can vary greatly — but it is probably more expensive than jogging.

2. It Helps You Know Where You Want to Be

While most retirees indicate that they want to stay put in retirement, relocating can really set the tone for a new chapter of your life and launch you into doing what you want to do.

And, where you live is one of the most significant factors in determining how much you need to retire.

  • Spending time with the grandchildren is a lot less expensive if you live nearby.
  • Love walking on the beach?  Is living near one less expensive than a vacation?

Use a retirement calculator to compare potential costs of different lifestyles and retirement locations.

3. How You Spend Time Will Determine Happiness — Not How Much Money You Have

The currency of most of our working lives is money.  How much we make and are able to spend is how we judge ourselves.  It consumes our every waking hour.

And during that 9-5 existence, what was it that most of us wanted? TIME!

As we built our careers and raised our families, we were woefully short on time — time for ourselves, time to focus on what is meaningful, time to give back.

The good news is that in retirement, you have time.  And research says that time will make  you happier than money.  The power to control your own schedule and focus on what is important to you is a tremendous source of emotional well being.

4. You Will Be Emotionally Healthier

Did you know that depression and sadness is a common byproduct of retirement?

Retirement is supposed to be super exciting and joyous.  However, the reality is that many people feel depressed after retirement — especially if they don’t have a solid plan for what is replacing their job.

Many people define themselves by the work that they do.  So retirement can represent an actual loss of self identity — which can be very confusing. Furthermore, work gives you a lot of inherent rewards: money, success, positive feedback, a social network and more.

If you have a plan for redefining yourself in your retirement years, you are less likely to experience an emotional crisis.

5. You Could Find a Source of Retirement Income

If you know what you want to do in retirement, maybe there is a way for you to make money doing it.

Encore careers are a huge trend.  Sometimes this means a full time endeavor, other times it is just a way to make a little extra money from a hobby.

  • Like dogs? Dog walking can be a great way to earn money doing what you love.
  • Can you get a job at the front desk of your favorite golf course?
  • Is there a job you would enjoy on a cruise ship?

You might be surprised by how a little (or sometimes a lot) of extra money from a retirement job will significantly improve your overall retirement plan.  Try out different scenarios with the NewRetirement retirement calculator.

6. Thinking About What You Want to Do Helps You Find Purpose

Research says that having a purpose in life is one of the best ways to feel happy in retirement.

According to Stewart Friedman, practice professor of management at Wharton and founding director of the Wharton Work/Life Integration Project, “Research indicates that those who are happiest in retirement tend to be ‘giving back’ and discovering a sense of purpose… The most successful people in retirement look to use their talents and passions to make a contribution.”

While giving back can mean making charitable contributions, volunteering or starting your own non profit, having a purpose can be more modest or personal.

If volunteering or devoting your life to a specific cause are not of interest to you, know that there are many different ways to feel purpose.  Even spending time with grandchildren or caring for a pet can give you that sense of contributing to a cause. And, like volunteering, these personal activities have been proven to boost life satisfaction in retirement.

7. What Do Other Retirees Do with Their Days?

From skydiving grandmothers to 100 year old entrepreneurs, there is no lack of originality for how retirees spend their time these days.

However, according to the Bureau of Labor Statistics’ American time use survey, this is how much time retired individuals 65 spend on the following common activities each day:

  • 4.6 hours are spent watching TV
  • .9 hours reading
  • .7 hours socializing
  • .5 hours relaxing and thinking
  • 1.2 hours on other leisure

8. Think in 5 Year Increments

When planning what you want to do in retirement, you might find it useful to think in 5 year increments.  How do you want to spend your leisure time as you transition to retirement? What about in your first 5 years? How will that change in the next 5 years? And so on…

You can plan for major goals (running a marathon or visiting Paris) as well as think about day to day activities (how will you maintain a schedule and spend your free time).

When you have some ideas about how you will spend your time in each phase of retirement, you can better plan for how much each phase will cost.

If creating an online retirement plan, make sure to use a tool that enables you to set different spending levels for each phase of your retirement. 

9. Talk with Your Spouse

If you are married, planning your retirement is doubly complicated — especially on the subject of what to do in retirement.

You are lucky if both of you want to do the same things or if your desires are compatible.  Life gets a little trickier if you have different ideas about your future.

Once You Know What You Want to Do, Then Figure Out How Much You Need to Retire!

Knowing that you have enough money for retirement is important.  It is just not the most important thing.

And, while it can be a very complicated subject, figuring out how much you need is probably easier than knowing what you want to do.

Using a tool like the NewRetirement retirement planning calculator can make the job relatively stress free.  This tool gives you the ability to easily compare different scenarios and customize all aspects of your plan.

Imagine your retirement, then figure out how much you need to retire happy

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