My husband has just retired. There was a beautiful ceremony and a lovely party. He got all dressed up – and so did I, for that matter. We wanted to look our best because we felt this was an important occasion. This represented a rite-of-passage. He would be transitioning from the world of dutiful work into a world far less well defined, and truly signified by a slowing down in so many aspects of life.
His retirement day made me think of a wedding. You set aside a day, get dressed up, have a beautiful ceremony and a lovely party. And a wedding represents a rite-of-passage from one’s singlehood into a future that can also be hard to define at that point. You start off wanting the best for each other and, you even go so far as to take a vow that you’ll stick to it in good times and bad.
Maybe we should do that with retirement. Take a vow, that is, that we’re going to define some goals, and stick to them to the best of our ability.
One’s wedding day and one’s retirement day have something else in common, too. They’re only a day. And the day itself isn’t really what’s important. What really, truly matters are the days that follow – the days that meld into a marriage and mature into a retirement.
Sounds great…but, we know, sadly, that almost one out of every two marriages ends in disappointment, divorce. And, it turns out that the stats are just a little bit better for retirement satisfaction. I found an obscure study, buried in Google’s basement back in 2006. About 420 people, ages 50-72, were tested to determine their “satisfaction” with their retirements. The question was asked of them as individuals, and then as married couples. Somewhat less than 60% of the married couples were satisfied with how their retirements were proceeding.
Three points: first, when 40% of a significant portion of the population is dis-satisfied with their status in life, that’s news. Big news. Second, the National Association of Mental Illness reports that about 20% of older adults suffer from significant depression. And third, many, if not the majority, of baby boomers and other After Fiftiers are financially unprepared for the realities of retirement living.
As with so much in life, nothing is simple – including dissatisfaction with retirement. And so, I propose that our 50+ generation take much more responsibility for our lives, and how it is or will be financed. Doing so, I believe, may bring a lowering of the depression stats and it may also increase satisfaction with our retirement lives.
Here are some tips for responsible living and financial health. If you think there are other tips to be included, let us know. We all need to help one another with this.
1. Hire two advisors: a financial planner and a tax advisor. (How to choose a financial advisor.) You may think your assets and holdings are too small to warrant professional review. In our mind, if you really, truly don’t have many financial holdings, then you especially need care. You have next-to-no-room for mistakes. And, we have found that really, really smart people know they don’t know everything. They are happy to consider advice from those who spend their days with their professional eyes on the economy. As for tax advice, you may think that if you file your own taxes you know all there is to know. Again, stop kidding yourself.
2. Be careful about Social Security. If you take it at 62 instead of a full retirement age of 66, you will receive 25% less in benefits for the entire rest of your life! Really! But, if you delay until you’re 70, you will earn 8% a year on your investment (try matching THAT in the market) and will earn a full 32% more in benefits for the entire rest of your life. Something to think about.
3. Remember, financial advice from family and friends is worth exactly what you pay for it. Nothing…or worse. Remember number 1 up above.
4. Curb your spending. If you are not yet retired, you should sock away every extra dollar you can. Be ruthless. Every dollar you save will compound over the years till retirement and will serve you many times more when you’ve closed that work door for the last time. If you are already retired, be honest with yourself about your spending. Reign it in. You’re going to need it.
5. Cut the conservatism. We’re living longer – that’s a fact. And yes, we want to be careful with the dollars we have. While some expenses will decline in retirement, others, like health care will increase, consuming 2 out of every 10 retirement dollars you have. In addition, health care is increasing at a rate that outpaces the CPI. Conservatives may say to keep pace with inflation – or the CPI – but do that, and you’ll find yourself with an empty bank book just when you need it for your own long-term care.
6. Develop an estate plan. Add an estate planning attorney to your list of professional retirement cheerleaders. He or she will help you make sure that your assets are distributed as you want – as you really intend – and will protect your estate for the benefit of your loved ones.
When we were getting ready to walk down the matrimonial aisle, he and I sat down and drew up a list of goals we wanted to achieve as a couple. Yes, they may have been a bit naï¿½ve, but those goals helped us to understand what was important to each other. Truth is, we’ve been struggling to develop a list of goals as we venture into his retirement phase. But we’re not giving up. We want to be among those who rate retirement as a satisfactory stage in life. And there’s a strong chance that following these 6 steps will firmly ground our financial future. With our finances in place, retirement should be a breeze, literally.