Do you remember the song Somewhere Over the Rainbow from the Wizard of Oz? I could be wrong, but I think that?s something like the concept a lot of people have about retirement. It?ll be a whole new life, with brilliant new adventures, and none of the problems of your current life. But will it? More likely, retirement won?t be an end game, but more of another phase on the road of life.
Let?s look at some hazy, but perhaps over-optimized assumptions that may not be realized when the retirement years hit.
Your Pre-Retirement Life Won?t Suddenly Disappear
Life comes with a curious mix of pleasant and unhappy circumstances at every phase. While it?s common to think of retirement as some sort of nirvana, the basic patterns of life are unlikely to change substantially. You won?t suddenly wake up one day retired, and find yourself on the blissful other side of the rainbow. In fact, post-retirement life may look disturbingly similar to pre-retirement life.
Let?s start with the basics. You?ll still be you. Your circumstances may change somewhat in retirement, but that much won?t. And while you may in fact have a more carefree life, the people around you ? even the ones you love ? probably won?t. How much peace you?ll have in retirement may be largely dependent on the status of your loved ones.
For example, if you have an adult child who?s going through a divorce, dealing with an illness, or facing a career crisis, that won?t go away because you?re retired. Neither will an in-your-face neighbor, rising property taxes or bad internet service.
And the big picture? It will be totally unaffected by your retirement. There will still be wars, obnoxious politicians making promises they have no intention of keeping, environmental degradation, inflation, and all the other macro problems that have affected us all our lives.
Your Income May Not be as Stable as You Think
Have you noticed how retirement projections always include perfect world scenarios? You know what I mean ? you?ll have to X amount of money saved, producing Y income? It?s as if your retirement will run on guaranteed assumptions.
And you know what they say about that ? never assume.
Sure, your Social Security will remain constant, and so will your pension, in the increasingly unlikely event you have one. But beyond that, expect fluctuations.
Even if you have X amount of money saved, the income it will produce will not be a fixed number. For example, if you?re counting on interest income, it?s a fact that interest rates change, sometimes dramatically. If you retire with 5% interest, but rates drop to 3% a few years later, your income will take a hit. By contrast, if rates rise to 7%, you?ll have more income than you expect.
The situation is even more dramatic if you?re primarily invested in the stock market. During a bull market, you might reasonably expect annual returns of around 10%. You may be able to withdraw 5% of your portfolio each year for living expenses.
But should the stock market experience a major slide, like it did during the Dot-com Bust and the Financial Meltdown ? on the order of 50% ? you may find yourself unable to take distributions from your portfolio at all. In fact, at that point your retirement may be at least temporarily in doubt.
You may even find that there are different times when you?ll need to come out of retirement at least partially, and work to supplement your income. A major stock market slide would be just such a time.
There?s just no way to know for certain, and that?s what you need to be prepared for.
You Won?t be Insulated from Problems and Crises in this Phase of the Road of Life
I just covered how family problems and stock market crashes will still affect you after you retire. But that?s just the short list. There are all kinds of problems that can visit your life, whether on a global level or personal one.
For example, if gasoline prices suddenly double, that will be no less a problem in retirement than it was when you were working. You may not have the commuting issue, but it might seriously cut into a fixed income.
Health is another variable, and the divorce rate for Baby Boomers is actually rising with age. Meanwhile, this article in The Atlantic raises an interesting phenomenon known as “grandfamilies”. It’s a rising trend in a world where broken families and out-of-wedlock births are fast becoming the norm. Unmarried, divorced, or crisis stricken adult kids are increasingly turning their kids over to the grandparents to raise.
This isn?t to spread doom and gloom, but rather to point out that it?s just as important to be emotionally prepared for the retirement years as it is to be financially prepared.
Your Social Life May Change, and Even Radically
The same work that we try to escape through retirement is also often the primary source of our social interaction. For many people, most of their friends are work related. This makes perfect sense, because not only do you have the commonality of occupation creating a bond, but you also spend a lot of time together.
Once you stop working, it?s likely those work friends will gradually disappear.
You may also find that retirement itself creates something of a social barrier. You and your still working friends may gradually find you have less in common. Other retired friends may move away.
It might be necessary to create a whole new social network in your life. That?s not something most people plan for, unless they expect to move to a distant location when they retire. But it?s something that requires at least a loose advanced game plan.
Your Health May Change ? And it May Even Get Better
This is actually a mixed bag. While we generally associate advancing age with declining health ? and that?s certainly possible ? it?s not the only potential outcome.
Many health conditions are stress-related. These can include headaches, stomach aches, hypertension, obesity, anxiety, depression, and a host of other ailments. All can be either caused or contributed to by stress. Once you?re no longer working, or at least working full-time, much of that stress will disappear.
You may also find that you have more time to maintain your health. More time to exercise, to create a healthier diet, and even just to relax.
It?s entirely possible that the main health-related outcome of retirement will be improvement, not decline.
And it?s something that?s worth preparing for. If you?ve never taken much time or effort to improve your health, have a game plan for when you retire. And don?t wait for that moment to come ? gradually implement changes as you move forward.
You May Even Be in a Whole New Career
The classic view of retirement is a complete end of work. But a more realistic view ? at least for the majority people ? may be shifting into a different kind of work.
There?s nothing inherently evil about work, unless you hate what you do for a living. But once you reach the retirement years, and the pressure to create and finance a lifestyle is no longer there, it?ll be easier to concentrate on doing the kind of work that you find rewarding.
That?s more important than most people realize. Work doesn?t have to be agonizing. And when you consider that it?s one of the main connections we have to the human race, you may not want to make a complete exit from the ?rat race?.
I suspect that for most people, simply downshifting will be more than enough. Sure, you might want to dig out of the grind of the career you?ve held during your working life. But there?s plenty of work you can do ? in a completely different direction ? that you may find totally satisfying.
Not only will it enable you to earn additional income ? which may be more important in the future than you can imagine right now ? but it will also keep you engaged in life, and living with the purpose.
Winning advice from the pulpit
This past Sunday, our pastor hit another sermon home run. He emphasized God as Creator. He then made the connection that since we?re all made in God?s image, we all have the capacity to create.
That resonated with me, because it was something I discovered fairly late in life ? that I?m more creative than I ever imagined. Enough so to even make a living at it. I suspect most people are, even if they don?t know it.
If you can tap into your creative side ? and you almost certainly have one ? you?ll probably find some type of work that?s completely agreeable for you. If you?re currently retired, it?s worth investigating. And if you?re not retired yet, it?s well worth planning for.
Think about the things you like to do, or the things you?re interested in, and go from there. Just make sure you don?t erect any imaginary walls along the way. Think of it more as a blank canvas, and decide how you want to paint it.
What?s the Point of All this Negativity???
Simply put, no matter how much you might be looking forward to retirement, it ain?t gonna be Heaven on Earth!
The financial media is deep into selling us the dream. And why not, there?s money to be made in doing that. But retirement won?t be a dream any more than it will be a nightmare. It?ll mostly be a lot closer to your current life than you may be comfortable admitting.
And just as important, never let the dream of retirement get in the way of your current life. No one phase in your life is any more or less important than another. But to hear the media tell it, it?s all about retirement, and being prepared for that hallowed day.
When it comes, it?ll be about a lot more than how much money you have in your retirement portfolio. You?ll need to be ready for it all, even the parts that will have nothing to do with money.
They?ll be there, because retirement will be eerily similar to the rest of your life.
I just had to add a comment about changes in social life after retirement. The reason I mention it is that people generally think they need big social interactions to feel totally comfortable.
I am totally at ease with the way my life is (other than having to hold close to a financial budget) I have a more relaxed schedule as I do things I want when I want. Just this year (2018) I read 46 books. I keep myself occupied. Just recently, I found out that my sister and her husband think I need more social activity and include me in their plans to visit friends and relatives (my sister is the social hound), because they thought I was bored and lonely. Fortunate for me, these events aren’t a constant activity but periodically.
If you get the gist of my point, being social all depends on the individual. I let my sister take me places as I lost contact with some relatives because of the fact I didn’t have their address and I don’t drive since I no longer have a car.
All the other points in article boil down to this –Life is what you make of it, no one makes it for you but yourself.
Hi Maria Rose – I get what you’re saying because I’m pretty flexible socially. I mix easily with people, even strangers, but I’m perfectly comfortable being alone. I don’t need to be surrounded by people to enjoy my life. But then I do have the advantage of having my wife and kids. Now that our kids are in their 20s, we sometimes hang out, go on outings or double or triple dates with their s/o’s. I’ve never been a clique person, even in high school. There have been times I’ve had a lot of friends, and times when I had none, and I was never more or less happy in either situation.
You’re absolutely right that retirement isn’t nirvana, and I agree with having a plan, just make sure it’s a flexible plan! I think the best (and worst) part of retirement is that what you do is up to you now. That’s both a blessing and a responsibility.
I completely agree Gary. The same flexibility that’s needed throughout life will be totally necessary in retirement. I’ve seen enough retirees having to roll with the punches to know that’s true. The notion that you’ll be in never-never land in retirement is a dangerous (and naive) assumption. Even if you’re well set financially, you’re never guaranteed of even financial tranquility unless you’ll have several million dollars. And most people categorically won’t. But it you’re truly flexible, it won’t hurt as much.
I’ve only been retired for three years but I’d say nirvana is pretty close! Entertaining side gigs that make a lot of money I don’t need and way more time for my wife and my outdoor hobbies. Sure, some days like today, the trout weren’t biting but it was still a fun adventure, how often does a wild mink swim by you? Marriage that was always good is even better, I still see my same friends and business and political contacts but I never get called out at night because the plant is on fire. It isn’t perfect but it is a better version of what was already a great life.
I’m a rarity here. I retired from law enforcement at 49 years old. I had enough time on the job to secure my pension. The way it was structured after 25 years I could not make anymore so there really was no reason to stay. I was mentally burned out anyway.
I started my own business 5 years ago. So I never considered myself retired. I work more now and am much more happy than before. My social circle all but disappeared after I left the job. I have no contact with anybody I worked with. Some of it is my fault. I found that I didn’t want to hear about the job anymore. Or the complaints or what’s happening there. All I ever heard about when I talked to any of my former co-workers were these types of things.
You’re right though. Life didn’t really change for me other than my career. We are who we are. You are who you are retired or not. Problems are problems. Problems don’t care how old you are. If you’re retired or not. Nobody else cares either. Wheather your on a fixed income or not. Companies raise their rates. Healthcare rises. They don’t ask your status.
The machine rolls on. No matter whether you’re retired or not.
Kevin, you’ll like this one ” it rains on the just and the unjust alike” even if you’re retired. LOL
Hi Tim – I’m very familiar with that one, it’s Matthew 5:45 “…for He (God) makes His sun rise on the evil and on the good, and sends rain on the just and on the unjust”. It points to God’s prevenient grace, making blessings and provision available to all, even to those who don’t believe in Him.
In reading your description of your own life, it occurred to me that I should have interviewed you for this article. But then I suspect it applies to probably the majority of people, except – and only to a limited degree – the very wealthy. But even the wealthy face trials and tribulations, that don’t disappear just because you stop working. Most of the people I know who retired have expressed surprise at how much life doesn’t change. Some go from worrying about work, to worrying about money (inflation is particularly hard on those on a fixed or reduced income, and it’s much higher than commonly reported in the CPI).
In regard to former coworkers, I’ve found that whenever I’ve left a job, the work friendships disappeared soon after. You just don’t have the common ground anymore, and you and the coworkers move on to the next adventure. Where it becomes more pronounced in retirement is that you’re leaving a job for no job, so you have to find other ways to find friendships. It’s certainly doable, but not as easy (or passive) as developing work friendships.
If you think about it, most friendships are not really real. Most are built on a common experience such as work. When the common experience ends so does the friendships.
I’m lucky enough to still be friends with a few guys that I grew up with. We have kept the friendships throughout life. Regardless of location or what each of us is doing in life.
I have learned in life, everybody has the same feelings, issues and worries. All are common to man. There is nothing new under the sun. I know some very wealthy people who’s life’s are not much different than mine. They might have different stuff or nicer things but they have the same fears that are common to all.
We’re all given a certain amount of time. No amount of money can buy health or more time.
Maintaining purpose in life is the X factor. Retiring from a job is no different. You might be retiring from a job but not life. Your officially retired when your in the ground and gone.
In my accounting days I knew a good number of people who were well off, and one of the things that surprised me is how they still worry about money. But as I’ve written in the past, if you’re fixated on building a big bank roll throughout your life, you don’t suddenly turn that off when you retire. Of course I’ve also seen plenty of people who didn’t have a lot of money fixated on money, but I can more easily understand that. When money’s tight, it’s easy to obsess. I think human nature is to obsess on what you don’t have. But it’s puzzling when people who do have a lot still obsess. To me, the biggest benefit of having money is so you don’t have to stress about it, so to see someone with a lot still fixating on it has always been a mystery to me.
Example: I had an accounting client many years ago who had over $700,000 in CDs and a house that was paid for. He was in his 70s, and was obsessed with money because, as he put it, everyone he knew had millions. Talk about losing perspective! If you haven’t found that by the time you’re in your 70s you never will. I really felt sorry for the guy. He was wealthy by any objective measure, but still felt and lived as if he was poor. But again, if you’ve been doing that all your life, it becomes part of who you are and what you’re about.