Bill Duggan, Certified Financial Fiduciary · The Retirement Advantage, MI
Prepare for These Retirement Realities
What does it take to live your best life in retirement?
How much happier will you be when you retire?
Most of us have pretty high hopes for retired life.1
We expect to be a lot happier as retirees, looking forward to more free time to travel, relax, and enjoy ourselves.1
The reality doesn’t necessarily play out that way according to a study of over 2,000 retirees and pre-retirees.1
In fact, many retirees look back wishing they had planned differently and known more ahead of time. They regret “playing it by ear” and learning some of retirement’s subtler lessons the hard way.
Here’s why, with a look at some unexpected lessons most retirees wish they’d known sooner.
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Rare Insights to Consider Before You Retire
Insight #1:
Avoid borrowing from your 401(k)
Dipping into your retirement savings may not seem risky or short-sighted, especially if your retirement is decades away. That’s not how today’s retirees tend to look back on that decision, though.
Why? If you can’t put those funds back quickly — and if you’re not planning catch-up contributions later — you could be picking the pockets of your retired self, who likely won’t have the income you do now. You may also be forfeiting employer contributions. All of that can mean less support in retirement, which can compound your future financial stresses.
What to do now: Look at your retirement savings as “untouchable” during your working years. Only consider borrowing from it as a last resort and with a solid plan to get caught back up as soon as possible.
Insight #2:
Plan a new routine
Retirement can seem like a structureless, schedule-free time. Even though many of us look forward to that part of retirement, it’s not necessarily the best way to enter life as a retiree.
Why? Without the structure and interactions of work life, too much free time can cease to be a good thing, giving way to extreme boredom and loneliness.1, 2
What to do now: Think about a new routine, how you want to spend your time, and a loose structure for your day-to-day life. Having a new routine to rely on can make it easier to turn the page from work life to retired life.
Insight #3:
Get familiar with where you want to retire
Where do you want to live when you retire? Whatever sounds good on paper may not be the same in reality, especially if you’re planning to move somewhere you’ve never lived before.
Why? Local taxes, limited healthcare options, and seasonal changes could surprise you. So could new distance from your loved ones and other factors you wouldn’t know without spending more time somewhere.
What to do now: If you plan to retire somewhere other than where you live now, plan an extended visit, so you can get a better feel of the area — and whether it’s really a good fit for you in retirement.
Insight #4:
Pay off credit card debt before retiring
Credit cards usually have high interest rates. Carrying that expensive debt into retirement may not set you up for an easy life when you retire.
Why? Retirees typically live off of fixed incomes. The fewer expenses that come out of that income, the more there is to enjoy month after month. So, if you retire with credit card debt, you could be saddling yourself with extra financial burdens in retirement.
What to do now: Make a plan for paying down any credit card before you retire. Run the numbers to see which debt is costing you the most, based on the balance and interest rate, and focus on paying your most expensive debts down first.
Insight #5:
Keep your plans flexible
No matter what you plan now, life can change in the blink of an eye. When that happens, plans you’ve spent years making may no longer serve your needs.
Why? Growing families, changing health, and so much more may make today’s plans less ideal tomorrow. If you’ve built some flexibility into your retirement plans, you’ll have an easier time shifting gears and making key adjustments.
What to do now: Don’t forget about contingency plans, how your health can evolve over time, and how your wishes can too. Make it a point to factor some flexibility into your plans and revisit your retirement plans regularly, so you can update them whenever you need to.
A fulfilling retirement can be built with the decisions and plans you make today, laying the foundation for freedom and peace of mind you’ll enjoy tomorrow.
FINANCIAL LESSON:
How to Leverage Current Retirement Wisdom to Plan for a Brighter Future
Which retirement lesson came out of left field?
Which one has you rethinking your current plans or strategies?
However you answer those questions, the truth is it’s easy to get caught up in romantic ideas of retired life.
Any of us can get lost in the fantasy of never working again and doing whatever we want day in and day out.
As exciting as that can be, it won’t get you any closer to the life you want to live in retirement.
It also can’t give you a smooth transition into retired life or any lasting peace of mind about what’s next.
What can help?
A deeper understanding of retirement, your finances, and your goals is a good place to start.
And when it comes to retirement, the wisdom of today’s retirees can give you a priceless glimpse at what the future could look like — especially if you’re not up to speed with some of the finer nuances of retirement.
That wisdom can also help us dial in our expectations and take off any rose-colored glasses that could be getting in the way of prudent retirement planning.
Beyond that, revisiting your retirement plans from time to time can help.
So can the support and guidance of the people you trust.
Sincerely,
Bill Duggan, Certified Financial Fiduciary
The Retirement Advantage, MI
https://www.theretirementadvantagemi.com/
P.S. Sign up for my emails. My subscribers get my best insights.
Bill Duggan, Certified Financial Fiduciary
The Retirement Advantage, MI
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Bill Duggan, Certified Financial Fiduciary
The Retirement Advantage, MI
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1. MassMutual, 2024 [URL: https://www.massmutual.com/global/media/shared/doc/2024_massmutual_retirement_happiness_study.pdf]
2. Acta Psychologica, 2022 [URL: https://www.sciencedirect.com/science/article/pii/S0001691822003109]
Risk Disclosure: Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance does not guarantee future results.
This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The content is developed from sources believed to be providing accurate information; no warranty, expressed or implied, is made regarding accuracy, adequacy, completeness, legality, reliability, or usefulness of any information. Consult your financial professional before making any investment decision. For illustrative use only.
This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific situation with a qualified tax professional.
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Bill Duggan, Certified Financial Fiduciary
The Retirement Advantage, MI
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