There’s no doubt that your wealth and ability to manage your finances play a significant role in your confidence as you transition through different stages of life, and in particular, to and through retirement. As retirement approaches, the focus tends to be on financial readiness as you prepare to relinquish the consistency of a paycheck. However, what we have found while assisting and coaching many clients through this phase is that some of the challenges can go far beyond the financial aspect. Planning for how much money you have to spend in retirement and how you will spend your free time are equally as important and together can provide the key to a successful and satisfactory transition to this phase of life. As you think of your aspirations for retirement, it’s important to note this phase can last 30+ years (or one-third of your life) and many claim them to be the best years.
Over our many decades of experience in financially preparing clients for retirement, we have found there is a non-financial aspect of retirement planning that’s equally as important but often overlooked. Specifically, how will retirees fulfill the basic needs their jobs satisfied during their working years?
Beyond the core human needs of food, shelter, and safety, we have found most retirees are looking for three basic needs to be fulfilled in retirement:
Having helped many retirees get to and through retirement in the San Diego area and other parts of the world, we see a wide variety of fulfillment after their working years. The clients who are most fulfilled have planned for their abundance of free time. They retire to a life they want to lead, and aren’t retiring just to get away from a job or because they are being forced out.
Have you given any thought to how you might spend your time in retirement? If you have not and you are on the retirement doorstep, this will be a great opportunity to add this task to your New Year’s resolutions.
Most retirees who transition successfully have found a way to accomplish five distinct things that support the three basic needs noted above:
- They fill their time with meaningful tasks — structure
- They replace their work identity — purpose
- They stay connected with friends and relatives — community
- They keep mentally and physically active — fulfilling all three basic needs
- They feel financially secure — providing confidence to satisfy the three basic needs
It’s not uncommon for us to celebrate clients for their retirement, only to find out a few months later they’ve gone back to work. This should not be considered a failure but rather a discovery of how they will meet their three basic needs. Many who have gone back to work in some capacity after retiring have found they have achieved a renewed sense of enthusiasm toward their work because they now approach it with an “I want to” rather than an “I need to” attitude. Every person is unique in their approach to this fulfillment and there is no right or wrong answer.
Before you retire, you may want to consider doing these things to help you transition in confidence:
- Have a solid financial plan in place as your roadmap for anything finance-related. If you like the consistency of a paycheck on a weekly or monthly basis, your portfolio assets should be designed to provide that comfort for you in retirement.
- Outline and plan for how you will fill the three basic needs your work provided before you retire. How will you create structure in your day, a sense of purpose, and a sense of community? Many retirees find it helpful to write this down where it is visible until it becomes habit.
- Engage with professionals to outsource all the things you don’t want to do in retirement so you can spend your time doing what you really love to do. For example, if you don’t enjoy managing your finances, a financial advisor can continually monitor your portfolio assets, financial plan, and the ever-changing rules that affect your finances. Tax preparers can make sure your taxes are filed accurately and timely. Other professionals may help with things like maintaining your home or yard if you don’t enjoy those things.
- Lastly, we often suggest clients do a retirement “trial run”—meaning take time off work and pretend they are retired. If possible, we recommend taking at least two weeks to really get a sense of free time, making note of any observations during this time and answering the following questions: How did you feel? How did you spend your time? Did you feel more happy and content, less stressed, or anxious? Did you like the autonomy or did you miss the structure of a workday? Consider what made you feel happy and design your retirement around those things.
Retiring with confidence comes down to a simple question: What do you really want in life? We find the answers usually address the three basic needs of structure, purpose, and community.
Having the good fortune of living in the mild climate of San Diego provides so many opportunities to fulfill the three basic needs. We have the opportunity to be outside year-round to enhance our physical and mental well-being and our amazing city has a vast amount of opportunities to volunteer or serve as mentors that can satisfy structure, purpose, and community. And I wouldn’t be a good financial planner if I didn’t highlight that many of these volunteer positions do more than support our community but also come with added financial benefits like free tickets, etc.
Every client we have worked with has hopes and fears about retirement. Sometimes the pre-retirement wisdom and creativity of a plan can prove to be more important and valuable than the amount of money saved; a plan helps you think about how you will spend your time and seek fulfillment. Please give one of our advisors a call if we can help you plan to and through retirement.
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CCMI provides personalized fee-only financial planning and investment management services to business owners, professionals, individuals and families in San Diego and throughout the country. CCMI has a team of CERTIFIED FINANCIAL PLANNERTM professionals who act as fiduciaries, which means our clients’ interests always come first.
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