After reading last month’s blog post on return to office, it occurred to me I’ve had more clients retire since Covid than I’ve had in my 30-year career as an investment advisor and financial planner. So that got me to thinking, how does one “retire well?” Apart from the financial aspect, how do I help my clients prepare to ensure a “successful” retirement? And how do you define “successful” anyway? Every single one of us has the exact same amount of time to spend, 168 hours a week which after you back out sleep leaves about 110 hours to fill. But how do you prepare in a way that makes those hours meaningful and purposeful? So I set out to find the answers to these questions and in this month’s blog post, I’m going to share what I learned.
To set the stage, let’s take a moment to go back in time. In 1865, the average life expectancy in the United States was 35 years old. Only 4% of Americans were over age 65 in 1900. Fast forward to 2024 and according to the US Census Bureau, the average life expectancy in the United States is 79 years old, and there is a projected increase to 85 by 2060. If we consider our lives on a timeline, we typically spend 12-16 years educating ourselves, 25-40 years earning a living and now, with the increasing life expectancy, we’re looking at spending 25-30+ years in retirement! It’s like a second career. Yet much of the research shows that while the average person spends a good amount of time planning for the financial side of retirement, they’re not spending nearly enough time thinking about how to spend their time.
In the book Retire Right, the authors describe three distinct phases of retirement which I think are pretty accurate. The first phase, pre-retirement occurs when you’re still fully employed but you’re actively preparing for life beyond the office. For some, this begins the first day you participate in your company retirement plan, saving diligently and taking advantage of compounding. For others, due to outside financial obligations, this begins later in your career and may require more attention and commitment to saving. Do you remember the catchy commercial from ING with the big orange dollar sign asking, “what’s your number?” Well, this is the time to get more serious about finding out.
Phase two can be described as shifting into semi-retirement. For a lot of people, this means reducing time spent doing day-to-day tasks. Perhaps you’re preparing a successor to step into your role, allowing you to spend a little less time at work and a little more time discovering a new set of intellectual, cultural and social activities. Or maybe you opt to take more time off for travel and adventure. You still have one foot in the door, but now you’re looking at the next chapter through a new lens. For many at this stage, you feel both excitement and dread at the same time. You’re excited for the possibilities that lie ahead, but worried you’ll lose your sense of self, parts of your identity and for many, your social circle.
Phase three launches you into full retirement. You’re finally there. You’ve reached the proverbial promised land. You know, the one promising sunshine & sandy beaches, quality family time and exciting trips. But what are you retiring to? Well-respected retirement researcher Mitch Anthony describes today’s retirement as a “non-linear process.” His research shows that to have a successful retirement, you have to figure out how to best transition from your work life into your new retired life. And I’m not talking about the financial transition. I’m talking about the personal one. How you spend your time. Where you seek meaning and connection. How you adjust to spending all day long with your family members who live at home and discover a new normal. A 2018 survey conducted by Invesco Consulting Group showed that out of 5,000 retirees surveyed, more than half returned to work within a year (56%). And the most surprising finding? Most of those surveyed didn’t return for the money. They returned because the reality of retirement wasn’t all it was cracked up to be. I heard Mitch speak at a conference a few years ago, and I remember him talking about Day 63. That’s the day when you realize that spending your days at the golf course, the spa, having lunch with friends or taking the occasional vacation isn’t enough to get what you really crave. Purpose. Connection. Productivity. Satisfaction, Joy. Fulfillment. These are the attributes that describe the difference between living in retirement and living well in retirement. Reflecting on the experiences of our firm’s retired clients, I’ve come up with a list of some of the most important observations I’ve seen.
Observation #1. Plan for both the expected and the unexpected. While we all have some idea of how we want to spend our time in retirement, the best laid plans don’t always work out as intended.
Observation #2: Stay curious. Try new things! Take a class. Volunteer for a non-profit. Learn a foreign language. Try your hand at beekeeping. There are endless possibilities to explore. Curiosity is the fountain of youth.
Observation #3: Take excellent care of yourself. Now might be the most important time to focus on physical fitness, a healthy diet and activities that nourish your brain. Eat the rainbow, move daily and remember, your body really IS a temple.
Observation #4 – Don’t go it alone. Build a strong support system of family and friends. Play with your grandkids. Nurture your friendships. To have good friends you need to be a good friend. Do not underestimate the importance of connection.
Observation #5: Attitude is everything. Embrace the positive! Choose your thoughts with intention and try to focus on the good things in your life. It’s always there if you look for it.
Observation #6: This might be the most important observation of all. Don’t wait. Don’t wait to take that trip. Don’t wait to use the formal china. Don’t wait to have lunch with a friend. Don’t wait to make that phone call and tell someone you love them. As Nike would say, Just Do It.
Now that I’ve outlined several important observations, as a CERTIFIED FINANCIAL PLANNER™ professional, I would be remiss not to mention the importance of fully understanding the financial aspects of retirement. You need a well-thought-out plan for efficient transfer from accumulation to distribution, spend down strategies, when to claim social security, how to make Medicare decisions, and clarity surrounding gifting & estate planning. In other words, the foundational financial building blocks for successful retirement. But it’s also important to remember that while money will fund your retirement, purpose will drive you. It’s purpose that makes those 110 hours meaningful. It’s purpose that helps you focus on relationships, enjoy your grandchildren and delight in discovering new adventures. One thing I’ve learned is that the true secret to retiring well is to give equal attention to your money and your time.
Footnote: Becker Capital’s team of CERTIFIED FINANCIAL PLANNER™ professionals are qualified to help answer your financial questions and map out your customized financial plan. Contact your relationship manager to get started.