Easing into Retirement

Easing into Retirement

For many people, crossing the bridge into retirement is a big step. After spending years building your career, you’ve probably accumulated a nest egg along the way. If you are approaching retirement, it’s time to develop a strategy to facilitate a smooth transition from the world of work to the world of leisure.

While retirement planning usually focuses on preparing for your financial future, nonfinancial issues may also need to be addressed.

When retirees report feeling dissatisfied with retirement, it is often the nonfinancial issues that are the culprit. Specifically, lifestyle changes, as well as self-esteem and identity issues associated with the loss of one’s profession, tend to create the most difficulties.

Stay Active

One possible solution for managing these challenges may be to slowly ease into retirement. Some individuals may welcome the opportunity to continue some form of work, such as consulting, job-sharing, mentoring, or back-up management. Mentoring, in particular, enables an individual to transfer a lifetime of learning and experience to a friend, relative, or younger colleague. Phased-in retirement provides an “anchor,” allowing new retirees to explore other activities while also maintaining the meaningful role in which they have grown comfortable.

From a psychological standpoint, some people find that separation and disengagement from a lifetime of work is more emotional than they expected it to be. Experience suggests that it might take between two and five years to “decompress” from the personal investment required of work-related activities.

Maintain a Healthy Perspective

Perspective is an important factor in enjoying the retirement years. While “retirement” suggests the end of your working life, a more positive perspective suggests the beginning of a new phase of life—a phase in which you can do all the things you never seemed to be able to find the time for while you were working. For example, volunteer work can allow you to make a valuable contribution to a charitable cause and meet new people. Taking courses in areas that interest you can sharpen your intellect and help maintain your cognitive abilities. If chosen thoughtfully, these activities can be enjoyable and fulfilling.

Obviously, it’s a lot easier for a retiree to minimize work and begin considering other pursuits if financial considerations are secondary. People tend to think that it costs less to live in retirement. However, it is actually common for retirees to choose to increase, rather than decrease, their expenditures, especially in the first few years of transition. Without working full-time, retirees may have more energy and time to enjoy entertainment, dining out, travel, and recreation.

Keep an Eye on Spending and Inflation

During the working years, it is common to take a certain lifestyle for granted. In retirement, with more time available for reflection, it may be appropriate to assess how you have been living and prioritize your various activities. Depending on your circumstances, you may need to change your priorities or consider budgeting. On the other hand, you may find that you no longer need or want to do some of the things that seemed so important when you were working.

Additionally, be sure to keep an eye on the effects of inflation after retirement. For example, an item costing $100 when you are age 65 will cost $180 at age 80, assuming a 4% inflation rate compounded annually. Therefore, it is important that your retirement plan be not only a plan “at” retirement, but also a plan continuing “through” retirement, which may require revision on a regular basis.

If you view retirement as your opportunity for growth and exploration, you can make this transition exciting and enjoyable. Your horizons are limited only by your imagination. Through your hard work, you’ve earned this opportunity—enjoy the freedom!

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Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. Your results may vary.