Make a plan for the 3 stages of retirement
Many people dream about retiring. Some prepare very well and have sufficient assets and are well prepared financially. They have a plan to overcome volatile markets, higher health care costs and higher income taxes. Some people just wing it and say they will retire even if they have to eat dog food.
Hopefully you are not in this last group.
Many baby boomers will not have the retirement they dreamed about because of the Great Recession of 2008. Many lost their jobs and were forced to retire sooner than planned.
Some had to start Social Security sooner than planned and locked in lower rates. Many had to dip into 401(k)s sooner to live on. The recovery was slower than normal. This meant wage increases stagnated. Things are just beginning to improve.
Today’s focus is on the non-financial issues with retirement. Many people form relationships with fellow workers. This is often an important social connection. When someone retires they must have a plan to not be isolated from other people. A 2013 British study found retirement can increase the risk of depression by 40 percent.
A recent Transamerica study found that 61 percent of American workers would like to work part time after retirement. This can help to continue social interaction and improve their financial condition. You may be able to work for your former employer or do contract work. Many more signs are appearing at businesses looking for more employees. This creates some new employment options.
While you are working, there is a lot of structure in your life. You have a schedule you must keep. When you retire, your day is much more open. You probably do not have a certain time you must get up each morning. It may be helpful to create your own schedule. Plan to eat well, exercise, get plenty of sleep and have some fun. Grandchildren are often a pleasure to enjoy.
There are normally three phases of retirement. This first stage is when you are the most healthy. You often have a bucket list of things to do. Sometimes it may seem that you will never complete the “honey-do” list. Retirement is a lot different than your working years. That does not mean that you will have too much free time. I often hear retirees, “I don’t know how I had time to work.”
The second stage of retirement is probably when you have a little more time, your health is still decent, but you feel your joints a little more. Sitting on the porch does not sound so bad. The last stage of retirement is when your health becomes a bigger concern. You are afraid to be away from your doctor or home.
Prepare for retirement early. Even small amounts saved add up over the years. Put a little more away and your retirement can be more enjoyable.
Remember, most people are responsible for their own results. Have a plan for the nonfinancial issues. This will greatly increase your overall satisfaction.
Remember, people do not plan to fail, they fail to plan.
Gary Boatman is a Monessen-based certified financial planner and author of “Your Financial Compass: Safe passage through the turbulent waters of taxes, income planning and market volatility.”
To submit columns on financial planning or investing, contact business editor Michael Bradwell at mbradwell@observer-reporter.com.