Don't Retire: Keep Significant Goals

The following is a guest post from Marotta Wealth Management.

Most Americans fail to plan adequately for retirement and consequently miss out on opportunities to enjoy the last third of life. The best and most rewarding financial planning is not just about the numbers but rather takes place in the context of personal goals.

Retirement used to mean not only a complete withdrawal from the workforce but often a retreat from life. Even the word "retire" has the connotations of shuffling quietly off to bed.

We call that traditional concept a "cliff retirement" because it is so abrupt. One day you are working full time, and the next you are playing full time (or slumped in your chair watching TV feeling unwanted and over the hill). We all need meaning and significance in our lives. And close social relations are an intrinsic part of our humanness. For many people, work provides meaning, significance and social relationships.

Try this retirement planning exercise. Draw a large circle and write the names of 10 people inside the circle who you are genuinely close to. Don't include any relatives. They have to love us, and although our connections with our families can be very nurturing, it is friends who help validate us and widen our horizons.

Now cross out any of the 10 names you know through your work, which might eliminate half or more of the people you listed. Thus a cliff retirement can devastate not only your meaning and purpose but your social network as well. Retirees who no longer work at all say their close friends dwindle to an average of about nine people.

As a result of their isolation, people who opt for a cliff retirement often deteriorate quickly and die relatively young. Financial planning is easy when you die young, but we don't recommend it. Here are some suggestions to consider as you approach what is traditionally considered retirement age.

Consider postponing retirement. Delaying retirement until age 70 increases your Social Security benefits and also shortens the time you will be withdrawing from your portfolio. It gives you additional years to save and your portfolio more time to grow. By delaying retirement from 65 to age 70, you may have more than a 50% higher standard of living when you do stop working.

Or instead of taking a cliff retirement, think about retiring gradually. Move from full time to 30 hours a week, and then to half time. With this less hasty transition you can maintain contact with the people and purposes that give your life meaning and also have the time to develop goals and a network of relationships for your later years.

Envision your final years not as retirement but as financial independence. Now that you don't need to work exclusively for money, make a list of activities where you would like to focus your energies and use your skills and experience.

Consider developing a health and fitness routine. If work kept your mind and body engaged, you will need to replace that activity with other pursuits. Again, going part time allows you the luxury of processing the transition and adjusting to a new lifestyle.

Challenge and reexamine those stereotyped and overly rigid assumptions about retirement. Two books that may help you tailor your retirement to be a productive and satisfying time of your life are "Encore: Finding Work That Matters in the Second Half of Life" by Marc Freedman and "The New Retirementality: Planning Your Life and Living Your Dreams at Any Age You Want" by Mitch Anthony.

Of course crunching the financial numbers is critical as you begin to contemplate retirement. But your personal calling, support network and health and well-being are just as important. In the end, a holistic approach to your life is always the best starting place.

Comments

[Dr Dean]

I see so many patients whose husbands have retired have many adjustment difficulties. I like the idea of a transition retirement, but many fields such as teachers don't allow part-time workers. Though many retire, they often get a second part-time job.

I encourage volunteer work during retirement as well to keep up the social networking that is so important.

[Old Limey]

I retired 18 years ago at age 58 after a 36 year career as an aerospace engineer, my wife, of 55 years, retired a year later after a 16 year career as a teacher. We had saved all of our life, and had always lived well below our means, and before retiring I had run a computer model to estimate what our income, expenses, and growth of capital would likely be during retirement for a range of expectations between the best case and worst case scenarios.

A great help was that the wonderful company that I worked for had arranged for outside consultants to come in and conduct a series of Saturday lectures for employees and their wives to prepare them for retirement. They covered every aspect thoroughly and we came away with a thick notebook full of all the course notes and many charts, and a much better understanding of what was in store of us, particularly from a financial point of view.

Neither of us have missed work at all. Sure we each had great friends at work, and we still keep in touch with some of them, but we have the kind of marriage where we enjoy doing things on our own and don't have to be part of a larger group in order to be very happy. Retirement gave us unlimited opportunities to do what we enjoyed the most which was to travel the world. Our bucket list is now empty, and for a variety of reasons we decided after last year's vacation that our days of international travelling were over. Flying half way around the world isn't what it used to be twenty years ago, it's gradually become a big hassle, especially for my wife after two hip replacements, and many of the places we visited, such as Africa, China, Indonesia, Nepal, Morocco, Turkey, and South America have changed dramatically due to rapid growth, crowded airports, far more tourists, and often because of political instability.

As our particular retirement turned out it has far exceeded even the best case scenario from my computer study of 1992. I naturally never realized that the Internet would evolve from the military's DARPA network and become such an engine for growth, and fuel the explosive dot.com bubble in the Nasdaq market. I also completely underestimated the bubble in the housing market that started in the late 60's and lasted right through until 2008. I also never realized that I would turn my computer software and analytical expertise into marketing a successful program for performing the technical analysis of market trends, and how it would improve my own investment capability.

The bottom line is that you can do all of the right things and make wonderful plans for your retirement but they will always be subject to the effects of large outside events that are unpredictable and beyond your control. You just have to make your plans, carry them out to the best of your abilities, and hope that everything works out at least as good as your worst case scenario. What you don't want to do is to retire early if it requires that your best case scenario has to still hold true, 15-20 years down the road.

[StLpastor]

I realized I often critique Marotta's posts, and I just wanted to say I think this spot on, and excellent. Thank you.

[Scott Messner]

Old Limey, that is an inspiring reply. Active couples can have an enjoyable retirement without the social interaction from a work environment. Congratulations on your retirement.

[Old Limey]

Scott:
My former Boss when I was working is a year older than me and still has his nose to the grindstone at 77. We met them a short while back at a wedding reception and his wife said to me, "I'm glad Roger hasn't retired, I don't want him at home all day long". I think that's sad and I feel sorry for all of the great experiences that he has missed out on over the last eighteen years. I loved my work and found it immensely rewarding but I was ready to start a new phase of my life. I was never in management but I have noticed that the higher up the ladder that men rise it seems the more reluctant they become to hand over the reins. We had executives that hadn't taken their vacations for many years until the company forced them to. I wonder if it is a "Power thing", judging by some of our politicians I think it is and it's one reason that I believe strongly in Term Limits, but they never seem to get passed

[Sunil from The Extra Money Blog]

i am not too concerned about this as i have been far removed from a steady 9 to 5 at a very early age. i also believe that one can never truly be retired or they'd go mad. if you ask many working individuals what would they rather be doing if not working, they will often mention several hobbies / activities not related to their work. unfortunately it is not until retirement when they start pursuing these. i have personally come across several successful entrepreneurs who made their riches after retiring from their day job. fascinating observation, and one that further validates my belief that one should pursue their passion as early as possible, with or without a full time career by their side.

[Georgia]

I never intended to retire. I loved my job and knew I would be bored being home 24 hours a day. But - at 69 - my husband's cancer was escalating and I felt he needed me at home instead of working 90 miles away. I retired with one month's notice and am glad I did. I got to spend another year and 9 months with my husband.

I actually worked for just over a year after I retired doing surveys for a govt. agency that paid well. But then my husband got worse and I had to be home with him pretty regularly. After he died, I went back to my old job for a 6 mos. temp job. I do volunteer some and am active in church. But I still hate retirement. I want an office job again, but at 74 in 7 days and with not enough computer experience anymore, I am unable to find a job. I also live in a very small town and am 40-90 miles from any larger cities. Most people in my town have to work and I will not take a job from someone who needs it. Guess I have to find more volunteer work.

My income is very adequate, but no overseas travel, which I would love. Instead, I visit family 2-4 times a year and they are scattered all around the edges of the U.S. I have been considering taking some online courses to boost my brain.

[Mike]

I find it hard to relate to the "cliff retirement". I know I've seen it a lot in my reading and the statistics of retirees dying in Florida soon after retirement are hard to refute.

On a personal note, I retired at the age of 54 after 38 years in California Government, the majority of time absolutely hating my career. I worked my way into a high stress CFO-type job for a big Department. I had been looking forward to retiring on my pension for decades. The stress was so tremendous that I was taking two antidepressants and sleeping pills at night just to make it through the next day. I got up to 320 pounds. Finally, the pension numbers worked out enough so I could pull the plug on the career. So, I waited for the "cliff" to hit. I was surpised that it hasn't yet.

In fact, it's been quite wonderful. We moved to the midwest and bought a nice house on a lake; the kind I could never afford in California. I lost 50 pounds, participate in triathlons, wrote a movie script, and teach part time at a local college. No need for medication and feel I probably added ten years or more to my life.

I guess if you love your job, the "cliff retirement" might be a reality when you have to give it up. However, if you hate your job, like I did, and get lucky enough to make it to retirement, you might get beyond the "cliff" because you'll find so many things you actually "want" to do; instead of your agency constantly needing you to do something. I know, a little strange, but that's my experience.

[carol]

The author is talking about two different concepts: the first being use of new free time; and the second, the financial aspects of retirement. Today's retirement is very different from the traditional model. Today's retiree will most likely have a combination of part time or seasonal work, leisure time, and volunteer work. I don't believe that too many people will have a "cliff" retirement.