A reader sent me an email recently that contained an intriguing question and one that deserved a post. I'll let his words set the scene:
"As a follower of your blog and a reader of various websites on the topics of aging and retirement, I see the focus upon and comments by those folks who have planned and prepared for retirement for years. They may now fret over "have I saved enough" and "should I downsize/relocate" and etc but they usually are very prepared. But what about folks who just sort of find themselves retired? And there are a bunch of us. They don't know what they don't know.
So my Question: have you done a post recently from the perspective of/ or directed to someone who "finds themself retired" without necessarily having planned to be there? All of the concerns of the unknown are quite frightening. The scare mongers who are usually investment companies tell us we need millions saved or we will be in the poor house.
The Internet is full of calculators that purport to give your Magic Number that most will not achieve especially when they find themself already retired. There can then be a tendency to enter this exciting chapter of life under the misconception that it will not turn out well. And you know that is not necessarily true."
He is quite right: becoming retired when you have planned for it, saved for it, and thought about life after work is one thing. It is quite another to suddenly finds oneself "retired" due to job loss, health or family situations, or simply burned out and needing to make a clean break. I can certainly relate. My retirement happened quite suddenly: my business went from robust to bust in about 18 months, about 5 years earlier than I had planned to walk away.
How do you know what you are supposed to know? Who do you believe? For those who have sort of stumbled into retirement what suggestions might I have?
For purposes of this exercise, I am assuming the the situation isn't caused by simply ignoring the realities that are ahead of us all. If someone thought "it will all work out" and that was the extent of their planning, I refer you back to this post: 5 Retirement Myths You Should Ignore.
But, if you were rushed into retirement before everything came together, what should you do? What should be your approach?
1) Prepare a clear-eyed, realistic look at your financial situation now.
This is a time to focus on where you are that this moment. What are your realistic streams of income? What is the condition of your investments, any pensions, future Social Security, and savings? Could you down-size your housing situation to cut expenses? Don't allow the "experts" who tell you you need X number of dollars to have a satisfying retirement influence your analysis of your situation. You have what you have. You will make it work.
2) Develop a strict budget that matches income with outgo.
Cut what doesn't fit. Align your resources with your needs. Wants will come later. Live within that budget. You can live comfortably on a lot less than you may assume. Nobody needs 150 TV channels. No one needs the latest smart phone. Even 2 cars may be an extravagance that must be given up. When I lost a job many years ago, with two young kids and a wife to support, we didn't go to the local mall for a full year. Mac and cheese became a staple, hot dogs a treat. No temptation helps keep spending in check.
3) Be sure to budget for health care.
I have admitted this before, but when I retired I forgot to budget for health care increases. This was a serious oversight. If over 65 Medicare will be your savior. If not, you are entering a scary uncertain place, particularly at this time in our country's history. Health care costs are really unknowable, but whatever you think they may be I'd suggest adding 20% and keeping your fingers crossed. Even with Medicare, you will have plenty of expenses. Plan for them.
4) Develop of list of all the activities, hobbies, passions, and interests you have had throughout your life.
If thrown into retirement before you are ready, you will need activities to help you stay busy and focus on the opportunities that lie ahead, not the mess you may be in now. Think of whatever you like, or even used to find enjoyable at some time in your past. You have the time to feed those passions. One caution: if your hobby is rebuilding classic automobiles, that might not be your best option until your finances are steady!
5) If you have a significant relationship put maximum effort into protecting and strengthening it.
Show me a study on retirement happiness and I will show you a section about the role strong relationships play in that journey. It could be a spouse, a significant other, or a best friend or two. But, you need those relationships to keep you on course and happy. Being with another person for 20 or 30 years in an unfulfilling, tense relationship is not a pleasant prospect. Use your new-found time to relationship-build. Trust me, it is worth more than money.
Knowing what you don't know, and then acquiring that knowledge is the first step to a productive and fulfilling retirement. You will make it work. You will not just survive, you will prosper. Retirement is all about you. Live it up.