ENJOY AN ENCORE LIFE
By: Suzanne Penn, MBA, Ph.D.
Chapter 3: RETIREMENT- IS IT TIME TO RETIRE?
Are You Prepared?
Is your will in place? Do you have a trust? Have you contacted the Social Security office so that you can receive income for the rest of your life? Do you have both a medicare supplement and a long-term care insurance plan? Do you have a plan for the rest of your life?
In this chapter I will help you prepare for retirement, but you will need to figure out what makes you happy during your encore life (ages 55 to 80).
Are You Happy?
Do you know that you can increase your happiness by spending money on others. People become happier when they spend their money on others versus themselves.
A journal of science published the following:
“This study addressed a paradox that economists have talked about for a long time- that increases in income don’t tend to lead to big increases in happiness. People buy bigger and bigger houses, but they don’t seem to get much happier as a result”.
The work included a national survey in which the group asked 632 American men and women how much they made annually; how much they spent each month on bills, expenses and gifts for themselves; and what they spent monthly on gifts for other people and donations to charities. They also asked them to rate their level of happiness.
The findings showed that those who reported spending more on others, what the team called “prosocial” spending, also reported a greater level of happiness, while how much they spent on themselves had no impact on happiness.
As we enter our mid 60’s, the focus of our life should be on happiness! This is one of the main things that we need to do.
Though retirement is an exciting period of life, it can also be stressful- especially from a financial point of view. Think about it: You’re suddenly going from earning a paycheck to receiving a fixed Social Security payment plus your savings. This can be scary! That’s why it’s best to follow the financial planning rules that you get from your financial advisor.
Biography
“Money Spent On Others Can Buy Happiness”-Harvard Gazette, 2008.
https://news.Harvard.edu/gazette/story/2008/04/money-spent-on-others-cab-buy-happiness/
Our Senior Population Is Really Increasing
Within the United States population we will be entering our mid 60s in record numbers over the next couple of decades. Last year, 14.9% of the population was 65 and over. By 2035, that share is projected to hit to 21.4%. During that same time, the share of the population over age 75 is projected to nearly double from 6.4% to 11.1%.
Biography
“How The Senior Wave Will Change The Economy”-Forbes, 2016.
https://www.forbes.com/sites/neilhowe/2016/09/30/how-the-senior-wave-will-reshape-the-economy/
Do you spend your time daydreaming about what you will do with your free time during retirement? However, retirement according to the Holmes-Rahe Stress Inventory is considered a top 10 life stress event.
The Stages Of Retirement
Pre-retirement
You should start mentally preparing for retirement well before you’re actually retired. You should speak to the current retirees that you know and ask them the following:
. What were your challenges as you moved through the stages of life?
. What helped you. each transition?
. Does your company or any community organizations offer pre-retirement planning courses that address work-life transitions.
. Look for books or web-sites that discuss tactics for handling the emotional aspects of retirement.
. Make a list of the things that give your life meaning and purpose today. Then think about how you can remain engaged even after you retire.
.Seventy percent of seniors 65 and over will end up requiring some type of long-term care in their lifetime-and that care does not come cheap!The average assisted-living facility in the U.S. costs $45,000 a year at present, while the average nursing home costs $85,775 a year for a shared room and $97,455 a year for a private one. And that’s a lot of money later in life, when your income is relatively fixed.
.That’s why it’s important to secure long term care insurance before you find yourself in a situation that could affect your finances permanently.
.It’s wiser to apply for your long term care insurance during your 50’s, when you’re relatively young. Then you stand a better chance of securing a health-based discount that will make paying for your policy more manageable.
.The smarter you are about planning for and managing your expenses during retirement, the less stress you will encounter. Avoid these mistakes, and you’ll be on the path to a fulfilling, worry-free retirement.
Transitioning to Retirement
Here’s what you can do to help you to transition into retirement:
. Give yourself a break- but watch the clock and set a time limit! Allow yourself a month off to enjoy yourself-and after this change your schedule.
. Have a list of things that you want to accomplish in your first year of retirement, such as traveling to see your kids or finishing a project that you have been waiting to complete.
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. Daily help yourself mentally and emotionally with a journal, calendar and budget. Track how you transition from day to day.
. If your emotions are causing you difficulties- seek out a support group or a counselor, to learn how to develop strategies to cope with life.
. While you are living in your retirement-consider planning for monthly income through a business and/or rental property.
Biography
https://www.fidelity.com/retirement-guidance/plan-to-generate-income?print=true
During Retirement
Retirement gives you more time to work on your emotional and mental well-being:
. Seek out activities that give you a sense of purpose and bring you enjoyment.
. Acquire a hobby. Invest your free time in ways that bring you joy and fulfillment.
. Stay connected to the world around you. Socialize with your friends, participate in community events, and keep up with current affairs that help you feel grounded and engaged well into your retirement years.
Biography
LifeLines: A publication of the AARP Life Insurance Program from New York Life, Fall 2018, “You versus Retirement: How to Get Mentally Ready-and Stay Ready”.
Should You Retire “Right Now”?
When you think about retirement, what are your primary concerns? Your freedom from work? Having more time to spend time with your grandchildren? Or can you really afford to retire right now? Your decision to retire should be based on the following steps:
. Look At Your Work Environment
Are you ready to stop working? Or are you not satisfied with your job? Having a lack of satisfaction may mean that you are ready for a new challenge. It could also be a sign that you are ready to leave the working world behind!
. Take Baby Steps
Have you thought about working part-time? Cutting back on your hours can give you more leisure time without severing your relationship with your colleagues and the workplace.
. Consider Your Finances
Where will you secure your income to retire? Will it come from Social Security, retirement accounts or pensions? Before you make a decision, you should review your current and projected expenses and create a budget for your future. Also include in your budget travel expenses, your hobby and possibly a move to another state or country.
. Your Health
You’ll want to spend as many years as possible enjoying retirement. Personal health problems or a family history of medical or cognitive issues could influence your decision to retire.
. Do You Qualify For Social Security
The retirement age for receiving full Social Security benefits is currently 67, however you can receive reduced benefits starting at age 62. The good thing is that Social Security benefits increase annually. Social Security benefits increase for each month past FRA that you delay taking them, up to age 70.
Many people assume that they don’t need much in the way of retirement savings because Social Security will cover the majority of their living expenses. However Social Security will only replace approximately 40% of the average earner’s pre-retirement income. Most folks need roughly double that amount to live comfortably during retirement. Therefore, if you don’t have a lot in your IRA or 401(k), you might want to postpone your retirement and extend your career until you have a better cushion.
The Key To A Happy Retirement
Happiness comes from maintains close personal connections. Also volunteering with an organization whose work is important to you can help you meet like-minded friends. Pursuing a hobby with friends can help you forge long lasting friendships and relationships-and make your retirement an enjoyable chapter of your life!
. Create A Retirement Budget
Creating a budget ahead of retirement will provide a snapshot of how much income you’ll have and how much you’ll need for living expenses. Review and adjust your budget monthly.
Many people think they can get away with not following a budget during their working years as well as during their retirement. But once you move over to a fixed income, knowing where your money is going becomes very important.
. Develop An Emergency Fund
An emergency fund should hold enough cash to pay for unanticipated expenses and living costs for a minimum of twelve months. An emergency account is something you should maintain through out your lifetime and replenish whenever you use any of the funds.
. Develop A Passive Income
You may be able to generate extra cash by owing rental property, or a business, annuities or stocks that pay dividends. These are ways to make extra income. Also favorable capital gains rates make dividend-paying stocks a good choice for extra cash.
. Hire An Attorney To Develop Your Will
Work with your legal professional to prepare your will and name a personal representative to oversee the disposition of your assets. Having an estate plan ensures that your loved ones receive your assets when you die. Proceeds from life insurance can help support a surviving spouse.
. Meet With A Financial Planner On A Regular Basis
Meet with your financial planner regularly to review your assets and ensure that your finances are on track and your investments reflect your risk tolerance and goals.
Biography
Let’s Talk Money January/February 2024, LTM Marketing Specialists LLC, “Retirement: Is It Time?”
