Being ready to retire is not only about the money. Although important, other factors are even more so to ensure a happy retirement.
You have dreamed about it. You play-acted it on your recent vacation. You saved for it. Maybe not enough, but hey, it’s never enough, right?
But are you really ready to retire? If your financial advisor tells you the money is sufficient, that’s wonderful! But that alone does not make you ready. We call this the “King Midas” myth.
But if money were the answer, then why do 40% of retirees say they were happier when they were working?
Think of it this way. We spent years and years and tons of money preparing for our careers. During our work life, we kept ourselves current in our professions to stay competitive. But now, when it comes to beginning a brand new phase of life, potentially lasting 25+ years, we just wing it. No preparation necessary. Grab the money and run.
But run where? What kind of a life awaits us? And how can we be sure we will be creating a life that will make us satisfied, fulfilled, and happy? Because retirement is not a perpetual vacation. We call this the “Carnival Cruise” myth, and if you believe it, you are likely to be very disappointed.
So what should you do?
Start by thinking differently about retirement.
Forget about the finances and the perpetual vacation for a while, and put some quality time into thinking about the daily life you want to lead in retirement. Begin by remembering the times you felt happiest in the course of your regular life, rather than when you were on vacation. Remember in particular the times when you felt an extreme sense of purpose, when you were so involved in what you were doing you lost all sense of time. Psychologists call this a state of “flow.” What were you doing? What were you accomplishing? Who were you with? What was the physical and social circumstances?
Now think about how you can recreate similar experiences in your retirement life. Write them down. Think also about those things you have always wanted to do (learn another language, read all the “great books,” learn to play an instrument, etc.) but never had time to do. Add these in too. Think about the overall context of your retirement. Where will you be living? Who will you be spending time with? What will you and your spouse be doing together? What will you be doing apart? Remember, we all need our personal space. Once you have thought about these questions, share them with those who will be part of your retirement life, to make sure they are in agreement and supportive. You need their buy-in to make it all work. Modify your plans based on their feedback. By doing these things, you become your own “life coach.”
Now you are ready to start adding in the details of what we call your “New Life Plan.” Put this plan in the context of your first two years of retirement. Think again about your daily life and routine, because this is what retirement is really about. Make some initial estimates about what this is going to cost in comparison with what you are spending pre-retirement. (Hint: plan for at least 80% of your pre-retirement spending, or more, unless you are making a major move to a significantly less expensive part of the world.)
Now you are ready to meet with your financial advisor, and they will be able to provide you with a very valuable service. You can now share with them the details of your New Life Plan and get help figuring out how to restructure your assets to support your new lifestyle. (Hint: in retirement, you will need to change the sources, and uses, of your income, so you are, in fact, developing for yourself a new financial strategy.)
What if it doesn’t all add up?
Your financial advisor can help you make adjustments to your plan to bring it into balance with your finances and the number of years your money will need to sustain you. The goal is two-fold: to have a happy retirement (because you have self-coached yourself psychologically to create a life doing the things you love) and you have done your best to ensure you don’t run out of money before you run out of life.
And here’s the ultimate incentive: studies show that happy people live longer!