September 30, 2011

I Don't Want to Retire Now...But I Want to Get Ready

The post from two days ago was written for those ready to take the big step now ( or soon). You've been contemplating this life change long enough. You want action. You want a satisfying retirement to start.

But, what if you eventually want to retire, just not now. You are not there yet. Maybe it is a savings and money issue. Maybe you enjoy your job and the stimulation it gives you. Maybe your responsibilities with your family must be front and center for now. Maybe retirement scares you a bit. That just makes you normal. For whatever reason, you want to remain in the workforce, but would like some suggestions on how to prepare for the day when you are ready.

There are two broad areas to explore. As a shameless plug, my e-book, Building a Satisfying Retirement, has information that applies equally well to you, as well as a new retiree. But, before you download it (please?), here are some important concerns:

A) Make Your Financial Projections: Get a paper and pencil, spreadsheet program on your computer, or anything that will help you with the following:

  • What is your projected income from now until you retire. Obviously, this is a guess. Your job might disappear tomorrow. But, based on your past situation, you should be able to make an educated guess of what you expect to make from now until you do retire. 

  • What do you expect to receive from Social Security? Avoid the "it won't be there for me" panic attack. We don't know the future, but we know the present. If Social Security undergoes revisions, then you will adjust your other projections. But, for now, use what is real today. You get a yearly report that tells you what you can expect based on your past earnings. Do you think you will have to take your payments as early as allowed, or will you be able to wait? There are logical reasons for both courses of action that are based on your status. Add that monthly amount to your projections.

  • What is the current status of your retirement savings and investments? You can't predict what the market will do. You can project how much you plan on saving and investing in the years ahead. Using a conservative growth projection, what should you have when you are ready to retire? What do you need to have available when you retire?

  • Here's a biggie: what about health care costs? None of us knows what the future holds in this area. Personally, the only thing I expect are prices to rise 15-20% a year until the majority of Americans have no coverage. Then, something will change. But, until then, plan on a 20% increase every year until you are eligible for Medicare (or its successor). Then add another 20% to that number.

OK, now with those figures available to you, can you live on that for 30 years? People in good health today who are in their 40s or 50's can expect to live into their late 80s or mid 90s. If you retire sometime around 65, you will have to take care of yourself for another 30 years. Can you?

B) Make Your Lifestyle projections: Your financial situation will determine the overall structure of the life you will lead in retirement. Lifestyle issues will determine the quality: whether it is enjoyable and satisfying. Are you ready?

  • Where will you live? Many folks want to escape weather they don't like and use retirement as the motivation to move somewhere more to their liking. Or, their family lives somewhere else in the country and moving closer would make them happier.

  • Others like the roots they have established where they are, have family and friends nearby, and don't want to go anywhere. Moving to a retirement community on the other side of the country would never cross their mind.

  • Do you envision yourself in an "active adult" community, an age-restricted setup, an urban or rural environment, or selling everything and becoming a nomad in an RV?

  • What about the complications that arise when one or both spouses are with each other 24/7? Trust me, this is a a major adjustment for both partners. No matter how much Dr. Phil you have watched, how many books on relationship building you've checked out of the library, and how much you love your partner, being together all the time is tough without some planning.

  • Do you have something besides work that you love to do? If work is your vocation and avocation what will you do when you don't have that anymore? Do you have any interest, passions, or hobbies you'd love to explore? It is best to figure that out before you walk in the door of your house, retired, with no idea what to do next.

I've made the point many times in multiple posts that retirement is a huge adjustment for anyone. I don't care how well prepared you think you are, there are things you have not forseen that will happen. Such uncertainty shouldn't freeze you in place. Life is all about change. There is no way to cover all your bases ahead of time.

So, what to do? Plan, plan, plan. Then plan some more. Consider everything you know and things you know you don't know. Then, when the time is right for you, just do it. You will learn to adjust. You will struggle, grow, panic, and thrive. That is life whether you are retired or not.

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  1. Great points. I think many people retire unexpectedly with no planning or cross their fingers and jump into retirement without going through these steps.

  2. Juhi,

    Denial is a common human condition, I'm afraid. We believe "things will work out." With something as detail-oriented as a satisfying retirement that is rarely true.

    Thanks for your comment and compliment!

  3. You bring up some excellent points, Bob. My husband and I are in the planning stages now. There are many things to work out, for sure. My husband thinks he'll love retirement because he can just do whatever he feels like doing at any time. He'd like to say one day, let's jump into the RV and go to the east coast and just do it. He wants that freedom to make snap decisions and not be tied down.

    Frankly, that sort of idea makes me cringe! When we go on a trip, it takes me a week to prepare, what with care for the animals, getting the house ready, all the details that need to be done. Plus, I like my schedule of exercises classes at the Y, working at the computer, doing my own thing - and that doesn't involve just jumping up and traveling on the spur of the moment.

    I'm hoping when he actually does retire, he will settle down and realize he doesn't need to be going at life like a Mexican jumping bean but it will probably take a few years.

  4. Joan,

    Most guys are like your husband. We are so used to someone else doing all the prep and planning, we have this weird idea that things just happen by themselves. When they don't we are surprised!

    You also present a great example of the work that needs to be done before retirement. There are usually two people affected by that decision. Both need to have equal say in the hows and whys of LAR (life after retirement).

    Betty and I went through a period of several years before we had the balance between her wants and mine working together instead of against each other.

  5. Every Baby Boomer should read your two posts -- all excellent, crucial advice. I'd only add one thing. For many people the partial retirement is the perfect way to ease out of the work force. It's not for everyone, but is esp. useful for early retirees. A friend of mine, age 63, negotiated a deal with his company to work 3 days a week. My sister lost her job, but managed to get a part-time position with a company that does business with her old firm. I was forced to retire early, in my 50s, but have managed to snag enough freelance assignments to replace at least a portion of my old income ... and to keep me busy enough to stay out of trouble!

    It's an option that's not always available, but opportunities are out there if you look around.

  6. Sightings,

    Just back from day in Lahaina, Maui so a little late in posting response!

    Thanks for the compliment on the two posts. The questions of when and how to retire are the ones I get the most so it seemed appropriate to address both back-to-back.

    Yes, an easing into retirement if you can manage it is an excellent strategy. This allows one to slowly adjust his or her mindset, use of free time, budgeting adjustments, and so on.

    As you noted, it also takes some of the financial pressure off.


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