When planning for retirement, we put a lot of focus and planning for the financial aspects of retirement. To create a plan that is balanced- we must also plan for the NON-Financial aspects.
The following post is one I contributed to recently. It originally appeared on the blog of Pine Grove Financial Group, a Minnesota-based financial advisory firm that specializes in retirement planning. You can find the original post on their blog here.
Have you thought about all the non-financial factors that help create a fulfilling retirement? Thatâ€™s right: To make the most of your retirement years, youâ€™ll want to do way more than just save enough money.
If youâ€™re on track to have ample savings in your retirement, congratulations, youâ€™re in the minority. But does that alone guarantee a satisfying retirement? Far from it.
Read on to learn more about the non-financial factors that go into a successful retirement.
WHY SHOULD YOU CONSIDER RETIREMENT FROM A NON-FINANCIAL PERSPECTIVE?
Retired Silicon Valley sales executive Dave Bernard has been thinking and blogging about the non-financial aspects of retirement for nearly a decade. In addition to his own blog, heâ€™s been a contributor to U.S. News & World Reportâ€™s â€œOn Retirementâ€ column and wrote the book I Want to Retire! Essential Considerations for the Retiree to Be.
Good financial planning is crucial for a successful retirement, says Bernard, but donâ€™t stop there. The best financial plan in the world wonâ€™t help you prepare for keeping yourself engaged in retirement. â€œIf youâ€™re working on Thursday and by Monday youâ€™ll be retired, thatâ€™s obviously a huge psychological shift in your life,â€ Bernard says. â€œHow ready will you be for that?â€
You need to play an active role in what your retirement life will look like, says Bernard. â€œIf you assume that the next 20 or 25 years are going to be like your prior life, whether itâ€™s physically, mentally, or socially, thatâ€™s an unrealistic way to see retirement.â€
THE NUMBER ONE RETIREMENT REGRET
Beyond his own retirement research and experience, Bernard says heâ€™s also learned a lot from the thousands of insightful comments heâ€™s received from his readers, as well as from other retirement blogs.
If asked to point to the most common regret heâ€™s heard from retirees, Bernard says it goes something like this: I wish I had planned more for all the time I now have on my hands.
â€œItâ€™s easy to get caught up in the excitement of reaching retirement,â€ says Bernard. â€œYou see this freedom at the end of the road. So you work hard in your career, you save what you can, and then you retire. But if you just walk blindly into it, that can be disastrous.â€
WHO AM I? SELF-IDENTITY IN A
â€œWhen you have a powerful position or a career thatâ€™s been defining you for years, youâ€™re confident in who you are,â€ says Bernard. â€œYouâ€™re a doctor, a teacher, a CEO. You have an identity and an easy response when someone asks, â€˜So what do you do?â€™ But when you donâ€™t have that anymore, it can be unsettling.â€
Bernard says a lot of people donâ€™t really plan for what theyâ€™re going to do in retirement. And for a while they can get by. â€œMost retirees seem to have a to-do list of trips, home projects, or hobbies theyâ€™ve been putting off. That might take up to six months or even a year. But then beyond that, many people hit a kind of wall,â€ explains Bernard.
RELAX AND EXPLORE: PUSHING PAST
THE RETIREMENT â€œWALLâ€
Itâ€™s this â€œwallâ€ according to Bernard that can cause anxiety for some because itâ€™s forcing them to face a new reality:
- Whatâ€™s going to get me out of bed?
- Whatâ€™s going to get me excited about life?
- Whatâ€™s going to give me a reason for living now that Iâ€™m no longer tied to the job or profession Iâ€™ve been doing for thirty years?
Yes, those may be profound questions, but Bernard cautions people to not put too much pressure on themselves. â€œYouâ€™re not going to walk into retirement on day one knowing exactly what itâ€™s about or who youâ€™re going to be.â€
Instead he recommends that people think of retirement as a time for self-discovery. â€œSure, wondering Who am I? can be a little stressful. But the flip side of that is you now have a chance to redefine yourself.â€
Bernard encourages people to be adaptive and try different things. â€œBuild that person that you want to be. Take the time it takes because, remember, you now have the time. So thereâ€™s no hurry.â€
BEYOND THE FINANCIAL: A RETIREMENT COACHâ€™S PERSPECTIVE
Reid Stone knows the importance of good financial advising. In fact, he spent more than 20 years working in the financial planning industry.
Ironically, his experience led him to realize that too many people see retirement solelythrough a financial lens. And for Stone, thatâ€™s a problem.
Today Stone is a certified retirement coach. Through his company My Lifeâ€™s Encore, he partners with financial advisory firms to help guide and educate people on the non-financial aspects of retirement. He also blogs about retirement topics and co-authored The Retirement Challenge: A Non-Financial Guide From Top Retirement Experts.
THE TOP FIVE NON-FINANCIAL CONSIDERATIONS FOR RETIREMENT
When Stone works with people planning for retirement, he begins by covering five key areas that he believes must be considered for people to have â€œconfidence, clarity and controlâ€ during their retirement.
1. CHANGE YOUR PERCEPTION AND
DEFINITION OF RETIREMENT
Stone writes that seeing retirement primarily as â€œsomething for old peopleâ€ or the stage in life â€œwhen our career ends and we fade off into the sunsetâ€ is not only inaccurate; itâ€™s downright unhelpful.
â€œWeâ€™re encouraged to save, save, save for retirement so when you get there, everything will be fine. But what I see happening is that people are reaching retirement and finding out something is missing,â€ says Stone.
Stone encourages people to adjust their retirement attitudes. â€œBe optimistic,â€ says Stone. â€œFocus on retirement as a new beginning because thatâ€™s what it really is. Thinking about it that way empowers you. You get to decide what retirement means to you.â€
2. REALIZE YOU COULD BE RETIRED FOR A LONG TIME
The Social Security Administration estimates that about 25% of 65-year-olds today will live past 90. Thatâ€™s just one small example of an undeniable fact: People are living longer today and life expectancy will continue to increase.
Be prepared to see more and more books like The 100-Year Life, which discusses the realities of living and working in a time of unprecedented longevity.
Stone points out that retirement could likely be a major portion of your life, not a brief coda to it. But Stone adds a caveat: The healthier you are going into retirement, the better the quality of that retirement will be.
â€œDonâ€™t wait for retirement to start eating healthier or being more active. Start before. Changing your behavior after retirement can be more difficult than you think.â€
3. RETIREMENT ITSELF IS CHANGINGâ€”
AND THATâ€™S GOOD NEWS FOR YOU
Take notice of the way people in their 60s, 70s and beyond are living today. In many ways it looks a lot different than how prior generations spent their golden years.
More than ever before, retirees are going to the gym regularly, volunteering in their community, taking courses at the local college, and maybe even forgoing conventional retirement and deciding to work indefinitely on their own terms.
â€œYou have so many more options today for how you spend your retirement,â€ says Stone. But he also says thatâ€™s exactly why itâ€™s more important than ever to plan for what you want to do.
4. CREATE A VISION FOR YOUR RETIREMENT
Stone says that well before youâ€™re actually retired, you need to envision what youâ€™d like to pursue and accomplish in retirement. He also says itâ€™s important to include your spouse in your vision and make sure youâ€™re on the same page.
RETIREMENT SUCCESS = TIME + DIRECTION
Planning for the non-financial aspects of your retirement is really trying to solve the following equation, according to Stone: Retirement Success = Time + Direction.
But where do you begin? Stone says thinking about the following areas of your life can help.
- Values & beliefs. Exploring these will help you define your priorities for retirement.
- Purpose & identity. No longer working in a long-time career means you need to prepare for a new identity. Who do you want to be?
- Work & learning. Will you want to keep working full- or part-time even after your retirement? Maybe you want to work in another field. If so, will you need training or education to make that change?
- Health & activity. What good habits can you start now to be ready for a long and active retirement?
- Family & friends. People need some level of social interaction. What will you do to adapt to a post-retirement social life?
- Leisure & travel. Give plenty of thought to how much leisure time and traveling will play a role in your retired lifeâ€”and include your spouse in your planning.
- Home & location. For a variety of reasons, retirement often involves changing homes, or at least changing how we live in our homes. Prepare for this likelihood before youâ€™re retired.
5. RECOGNIZE THE CONNECTION BETWEEN THE
NON-FINANCIAL AND FINANCIAL
Of course, in the real world, the financial and the non-financial factors involved in our retirement are inextricably linked. For Stone, itâ€™s crucial that we recognize this and adjust our decisions accordingly.
â€œIf the financial and the non-financial donâ€™t complement each other, your retirement will be out of balance,â€ says Stone. â€œYou ideally want to plan for both because a successful retirement depends on it.â€
Whatâ€™s the thread running through all the above insights? Planning ahead before you find yourself retired. Want a great place to start?
Learn more about Minnesotaâ€™s premier retirement planners,
the financial advisors at Pine Grove Financial Group.