Retirement Practice Run

Congratulations, you can retire!  These are the four magic words everyone wants to hear at some point in their lives, and for many, the sooner the better.  As a financial planner, I have worked with countless people on financial plans focused on retirement and seen the hope (and fear) in their eyes as I give them the final word on if, how, and when it looks as if they can finally retire.  One of the best parts of being a financial planner, in fact, is that you are able to show someone that all of the hard work and dedicated savings they have done over a lifetime of employment has finally paid off.  They can now, officially, tell their boss to “take this job and shove it!”

However, just because you can afford to retire, does not necessarily mean you should.  I have quite often found that after the initial excitement and euphoria of knowing you are able to retire has worn off, and the final decision to retire has been made, retirement, especially in the first few years, turns out to be less wonderful and exciting for many than they imagined.  Which, if you think about it, is really not all that surprising.  For someone who has worked for 30, 40 or 50+ years, it is not always easy to simply flip a switch and make the transition from full-time work, to no work at all.  Many people have a hard time figuring out who they are in the post-work world, or how they want to spend their newfound time.  People often base their entire identity on what they do for a living and so, are not sure who they are or where they fit in with society-at-large once they are no longer doing it. 

This may be because, as Americans, it seems the first thing we ever ask a new acquaintance is, “What do you do?”  When we are working and have a career, we usually have a pretty straightforward answer,  but when we are no longer working, it can be a much harder question to answer in a way that makes us feel good about ourselves and what we contribute to society. 

Another common issue I see with retirement, is how it affects family dynamics at home.   This is especially pronounced with couples who have spent lots of time apart during their working years, because either one or both were at work for eight or more hours a day, and perhaps even continued to work for several hours at night when they returned home.  These people often have a routine that they have worked out over decades which has functioned very well for them. Then, all of the sudden, one or both partners retire, and now they find themselves in each other’s faces and spaces 24 hours a day, every day of the year.  Sure, we all want to spend more time with our loved ones, but going from seeing someone a few hours a day, to seeing them every second of your waking life, can be a big adjustment and incredibly hard on a relationship. 

As a way to address and potentially mitigate some of these issues, I often recommend that people take “trial” or “practice” retirements before they actually make the final decision to quit working.  Before you fully retire, consider taking a nice long vacation from work.  If you happen to have built up some unused vacation or sick days over the years, this is a perfect opportunity to use them. The longer the better, is a general rule, but the key is not to make any major travel plans or take on any unusual projects that get you out of the house during this time.  Stay home and see how it feels.  Do you enjoy it?  Does your significant other enjoy it?  What will you do with your time?  How much golf, fishing or working in the garden can you really do and still enjoy it?  Does it seem as if you’ll be happy engaged in these activities for years and years to come?  Do you feel good about yourself and what you are contributing to the world?  Are you comfortable with your new identity as a retiree? 

To be sure, many people who do this feel just great about themselves and their new lifestyle.  For others, however, it is often a good reminder of how much they actually enjoy working and how much it means to their personal self worth to do so.  And if you do find yourself in the latter group, you’ll likely come to realize that just because you can afford to retire, does not necessarily mean it’s a good idea to do so.  Perhaps working a few more years might make more sense.  Or working part-time, or starting a new career doing something you are passionate about.  Volunteering your time for a local non-profit that does work you appreciate and value might be a better plan than flat-out, full retirement.  And since you no longer have to make money to get by, you may be able to devote your working hours to something that brings you even more joy and peace of mind than ever, while, at the same time, keeping you engaged and feeling good about yourself.

Following the same reasoning, when faced with clients who express a desire to move to another state or country in retirement, I generally recommend a similar trial period before taking the leap.  It’s quite common for the people I work with to tell me they want to move in retirement, whether it is because they want a slower pace of living, a change in scenery, to avoid state taxes, or to be closer to their children or grandchildren. Whatever the reason, this is something I hear often.  And honestly, a move in retirement can be a wonderful thing.  A whole new chapter in your life can begin as an aging adult.  But before you pull up stakes and buy that hacienda on the coast of Mexico, I highly recommend that you try it out first!  Don’t sell your house and all of your worldly possessions and move without first taking a serious practice run.  Take some time (again, the longer the better) and rent a place in the city or country to which you are contemplating a move.  See what the weather, the people, the culture are like.  Get out and talk to people.  Go to the super-market, go to the park, go out to dinner, go to the gym, or whatever it is you plan to be doing with your life in retirement, and feel it out.  And for those who are considering moving somewhere with a significantly different climate – like many of my clients who want move from California to Nevada, Oregon, Washington, or the east coast perhaps – live through at least part of one winter there before you make the final move.  If you do, and you still enjoy it, then great!  But it’s a terrible thing to sell your house, pay a load of taxes, spend a ton of money, and go through the incredible hassle of moving, only to find out a few months later that it was a mistake.  It can be incredibly difficult to move back once you have gone, and, at the very least, it will likely cost you a lot of unnecessary money, time and energy (not to mention embarrassment) to do so.

With the way demographics are changing, your retirement may well last for 20, 30 or even 40+ years.  Take your time to figure out when it is best to retire, what you plan to do when you retire, how your retirement will affect your family dynamics, and where you really want to live.  This is not a decision to be taken lightly, and not something that needs to be decided in a weekend.  Like everything that got you to retirement in the first place, planning with open and honest dialogue and contemplation is what is going to make it work.  Take the time, do your due-diligence, and then, once you have made a decision, embrace it with gusto.  And remember, when done correctly, retirement is not just about retiring from something, but just as much, or more importantly, it should be about retiring to something.