Not Your Father’s Retirement

For most of your life, retirement was probably a fuzzy concept in a faraway future. Sure, you prepared for it by diligently squirreling away money, but aside from that, the precise details of what your life might look like as a retiree got little attention. Now, retirement is here, or maybe it is looming on the near horizon, and the prospect is simultaneously thrilling and terrifying.

Suddenly, you have questions, lots of them, especially given the pandemic that erupted earlier this year. COVID-19 has changed our world in ways small and large, affecting the way we live, work, socialize and educate our children. You may have more concerns about retirement now. Some of those concerns will be pragmatic and others strangely existential. You may undertake a kind of soul-searching you probably haven’t done since your freshman year in college. Given the volatility we’ve all endured in the last few months, these questions are likely to tug at you with greater urgency as you enter that final lap before retirement.

Probably the most pressing of the pragmatic questions is whether the money will last as long as you live. As a client of TCI, you’ve likely been working with your financial advisor for some time now mapping out a financial plan for your retirement. If you stay the course, as planned, I can say with confidence that you need not fret about the money. Your plan has been stress-tested, and it is sturdy enough to withstand the markets’ inevitable stumbles in the years to come.

So, let’s set aside any anxieties about money and take up the other issues which actually are very significant. The great paradox of retirement is that there is suddenly so much time and yet so little. So what are your hopes and dreams for this new phase of life? What will you do with your time? How will you find fulfillment once you’ve left your job or sold your company? Will you be lonely without the social network at the office? Will you get bored of endless rounds of golf? What will life look like five years from now?

Teamwork

As a financial advisor, I see it as my responsibility to ensure that you are both financially and emotionally prepared for retirement. So I pose a lot of questions, but I can’t answer them for you. Only you can do that. Each one of us should try to define what our unique retirement will look like before we cross that threshold. Call it the retirement requirement. If you haven’t spent some time pondering at least some, if not all, of those questions, you probably shouldn’t retire yet.

Ideally, planning your retirement should involve your partner. There is a surprising degree of conflict that surfaces as soon-to-be retired couples try to work out the details of this next phase of life. One-half of all couples disagree on the timing of their retirement, according to a recent study by Fidelity Investments, and one-third fight over where to retire.

Baby boomers are the first generation in history in which a large proportion of couples have had two careers and, thus, two retirements to negotiate. These are necessary, but delicate, discussions. Proceed with caution, but definitely proceed.

A New Generation

One thing is certain: this won’t be your father’s retirement. Years ago, retirement often meant a loss of identity and purpose. Many older retirees had forged a strong single identity based on their profession. They were, for instance, doctors, airline pilots and judges who enjoyed power and prestige because of their occupations. That’s less common these days, though. Younger baby boomers don’t tend to define themselves as rigidly. They embrace multiple identities, professional and personal. (“I’m a CPA who runs a small wine importing business on the side.” “I’m a part-time doctor and part-time skier; my office is a mountain clinic at a ski resort.”)

For this new generation of retirees, retirement is less a hard exit from the workforce and more of a soft shift in how and where they spend their time. Some of my clients are considering a phased retirement, stepping away slowly from some responsibilities at work while moving towards passion projects. Others are negotiating consulting gigs or part-time work in their profession while they embrace new leisure activities.

Thanks to technology, there’s more flexibility about how, when and where work gets done these days. Many retirees are happily embracing all these new opportunities. A recent survey by Transamerica found that one-third of soon-to-retire folks plan to continue working for money. Some intend to stay in their current profession. Others want to launch a so-called encore career or start their own business. Have you given those options any thought?

Beekeeping or Blogging

At TCI, we define retirement as achieving a degree of financial freedom that means you no longer have to work for money. You may choose to continue working if that is fulfilling whether that means you take up beekeeping and sell your honey at a farmer’s market, launch a new lifestyle blog for silver-haired vagabonds or start a nonprofit to save the sea turtles.

The bottom line: there is no playbook anymore for retirement. You’re going to have to write your own. Work? Play? Work and play? It’s your choice. Research consistently shows that the happiest retirees are those who remain engaged, to some degree, in their careers, their causes or their communities, and they continue to seek out challenges to learn and grow, whether they are paid or unpaid.

One of my clients, a 61-year-old businesswoman who plans to retire in 2021, is smartly thinking of retirement as a series of stages. She’s had a long and lucrative career in a fast-growing business, but her industry was abruptly upended by China in 2018. The next few years will be chaotic as her company pivots to a new strategy.

Her plan: three years of reveling in all the travel and leisure she’d scrimped on during the gold-rush years at work. Then, she plans to put her expertise to work again with a part-time consulting gig at her old company. If that doesn’t work out, she has strong connections within her industry. She’s confident she’ll find opportunities galore when she’s ready to work again.

Reframing the Question

Imagining an unstructured future can be too challenging for some, though. If that is the case for you, consider reframing the question. Forget the big picture and focus on the small stuff.

What exactly will you miss about your job? Is it the thrill of earning a big bonus? The satisfaction of meeting goals? The high-spirited energy of working with a team? Mentoring young professionals? Or the surge of electricity you get from making an impassioned presentation? Identify more precisely what it is you have treasured about your job. Then, try to structure some of those experiences into your new life outside the office.

Leaving the workplace means leaving a cast of characters with whom you’ve shared a common goal. Sure, some of them were cranks, busybodies, crackpots or clowns, but there were likely some warm friendships to be found there, too. One of your top priorities in retirement will be to grow a new network of friends. Yes, it may feel awkward, like finding the right table in the cafeteria on the first day of high school, but it is absolutely necessary.

Creating a rich social life gets harder after retirement. When you retire, you’ll lose about half your social network. These connections are essential to your wellbeing: friends provide support, strengthen your immune system and help lower your stress levels to name a few. Social isolation is dangerous; studies show that it ranks with obesity and smoking as a high-risk factor for poor health.

Making New Friends

How will you find and foster new friendships? The possibilities are myriad: volunteer at a nonprofit, get involved with a political campaign, join a club or a sports league or sign up for a class. You might even reach out to friends with whom you’ve lost touch. Class reunions often reignite long-lost friendships and romances.

As a retiree, one of your biggest challenges may be forging a new relationship with money. That may be difficult for those who have been so sharply focused on saving for retirement. Now, you must flip the switch from saving to spending – within the boundaries of your financial plan, of course.

Still, watching assets shrink over time may spark some anxiety, in part because it is a potent reminder that time is short. As a financial advisor, my job is to monitor your financial fitness and reassure you that you’re still securely on track. I’ll also remind you that the true measure of a successful retirement isn’t simply its length but its richness. Are you fully embracing the adventure of this phase of life?

For all my questions and your answers, though, retirement will still be uncharted territory, a voyage that only you and your partner will navigate together. We on the shore can help you map a course. We can help you load the necessary provisions. Although, we cannot hoist the anchor or set the sail for you. It’s your ship, captain.