Successful Retirement: Looking Beyond the Numbers
“Do I have enough?”
Conversations around successful retirement planning frequently begin and end with the question of having enough money to make it to the finish line. Less than 1 out of 4 workers are very confident that they do (Figure 1).
Hard facts can be easier to talk about than emotions, hopes, and fears. Consequently, many retirement planning conversations tend to center around cash flow projections and the probability of your money outliving you. Some specific topics typically covered are: when to start taking Social Security benefits, planning for health care and long-term care, and budgeting for living expenses.
These numbers, important as they might be, are only part of the story. Equally important are the psychological dimension of this transition to your retirement years. You might have enough money to live well for another 30 years, but what are you going to do with all that time? How will you feel stimulated and fulfilled? What if those things you’ve looked forward to all these years — more time to travel and more time for your hobbies — aren’t enough to sustain you?
That is why we recommend that your financial plan includes a “retirement success strategy” to keep you engaged and fulfilled.
The least successful people in retirement are those who hated what they did to earn a living, and looked forward to a retirement when they could begin to do what they enjoyed.
The most successful are those who loved what they did during their most productive years, and continued their involvement with the same or closely related activities, possibly at a reduced scale, as they became older.
––Jack Guttentag, emeritus professor of finance at Wharton
Developing this strategy often is not easy. Our financial planners can assist you in this process. Some topics we regularly discuss with clients in our planning meetings are:
- Test-driving retirement during longer vacation periods in the years leading up to it. This might help you to figure out what you like to do in your free time;
- Phasing into retirement instead of going from full time working to full time retired;
- Taking a gap year between work and retirement to decompress and gain perspective about how to optimize retirement;
- Starting a second or “encore” career. This is a job that blends personal meaning, some income, and social impact;
- Putting together a bucket list and a plan to implement it.
A successful retirement can come in many shapes and forms. Starting early to think, talk, and plan will increase the likelihood that the fall of your life will be a season of reward and fulfillment.