Retiree in training

Practice makes perfect when it comes to retirement.

Are you ready to retire? Are you sure? Think about it before you say, “Yes!”

Most of us really look forward to the idea of well-deserved, unstructured free time. A time to do exactly what we please when we please – spend time with family, pursue hobbies, volunteer, travel. Until we get there. The 2018 Global Retirement Reality Report found that only 53% of Americans said they were happy in retirement. Some retirees underestimate how long it takes to adjust to what may be a radically different lifestyle; others miss their friends from work; still others find themselves with too much free time on their hands between grand adventures and visits with the grandkids.

Like all major life events, transitioning to a retirement lifestyle can be a major adjustment and comes with a few hiccups along the way. One day, you may go from your seat at the top as a powerful executive to a lounge chair in your living room with the TV or Fido for company. Without your career to define you, what will?

Finding the answer takes a lot of preparation – emotionally, physically and financially – and a lot of thought. While the financial component is critical to a sustainable retirement, so is your quality of life. Too few people consider the psychological factors of retirement, which include letting go of your career identity, shifting social networks and spending more unscheduled time with your spouse, as well as the need to find new and engaging ways to stay active.

It’s crucial that would-be retirees invest in their social, physical and psychological needs as well as their financial ones. And that takes planning.

All or nothing?

It turns out you don’t have to go all-in on retirement. You can transition into it, while still working. In the years before you plan to retire: Practice. Try out different aspects of your proposed retirement and see if they are as fulfilling as you imagined. If traveling is on your post-career agenda, start now with extended trips to areas of interest. Pickleball more your cup of tea? Practice now to ensure it’s as much fun as you hoped it would be. Having sampled anticipated retirement activities while you still have a job, can help with your eventual satisfaction in retirement. You may find you prefer a sort of hybrid retirement that blends work and leisure into the ideal mix for you.

You’re looking for fulfilling activities that also fill up your time in meaningful ways. Having an emotional connection, a purpose, to your activities helps motivate you and creates a sense of contentment. It’s important to really give some thought to what makes you happy. Allow yourself the luxury of introspection and give yourself permission to enjoy your 60s, 70s and beyond using the money you’ve saved specifically for this purpose.

Once you have a good idea of what makes life meaningful for you, take the time to experiment, explore and reflect on both your leisure and work options (e.g., part-time work, consulting, moving to a new industry) to find the right balance of time, money, work and play that will become your retirement lifestyle. This work-and-play approach serves best for those near traditional retirement age who are willing and able to remain employed longer in exchange for getting a good read on their retirement readiness.

Consider the work perks

There are benefits of continuing to work, in any capacity, while you try on retirement for size. The additional income can help you:

• Delay starting to draw down your retirement savings, allowing time for more growth.
• Start enjoying the retirement lifestyle that will be most fulfilling for you.
• Pay down unnecessary debt or splurge on a large purchase.
• Stretch your retirement savings. Even a part-time salary can reduce the amount you’ll need to withdraw. Earning a mere $10,000 a year could be enough to help you avoid making a 4% annual withdrawal from a $250,000 portfolio.
• Delay taking Social Security, until age 70. Each year you wait adds 8% to your monthly benefits.
• Reduce out-of-pocket healthcare costs since you may still be covered under employer-subsidized insurance.

To get into the right mindset, first figure out if you really want to retire and what that may look like. Imagine how you’ll spend your days as well as what a typical day would look like. Ask yourself:

• What current activities do I want to continue in retirement?
• What new things do I want to learn or do?
• Who would I like to see more of, and how often?
• Where would I like to travel?
• What role does work play in my life?
• What brings me joy?

A change of pace

Of course, everyone’s vision for retirement will be different, and any decisions about this important phase of life should be based on your financial situation and comfort level. If continuing to work while dipping your toe into the retirement waters appeals to you, run the idea past your advisor to determine if the idea is feasible. He or she can help you determine if a more gradual approach could help you adjust emotionally and financially, so you can achieve the ultimate reward: a happy, fulfilling new life.

Sources: T.Rowe Price; Forbes; The New York Times “Thriving at Age 70 and Beyond”; Employee Benefit Research Institute estimates from Health and Retirement Study (HRS), April 2016; U.S. News & World Report, “How to be happier in retirement”; Hartford Funds/MIT’s AgeLab; ssga.com