In life, knowing what to do is important. But in retirement planning, it’s what not to do that counts. In fact, if you want to ensure a smooth transition into retirement, knowing the traps to avoid is even more important than knowing exactly how to approach that phase of life.
Here are six common pitfalls that wise retirees manage to sidestep, and which you should try and avoid, too.
We’re constantly bombarded with a steady drumbeat of articles in the media and in advertising from financial services firms telling us to put away enough money for retirement.
That’s certainly important. But having a sound financial plan for retirement is only half of the equation. It’s also important to plan for how you want to invest your time after you’ve officially retired. In fact, several financial services firms are recognizing this fact, and educating their clients on the importance of planning more broadly.
For example, a recent Merrill Lynch/Age Wave study¹ highlighted how highly satisfied retirees develop a game plan: one that covers not just their investment portfolios, but their leisure portfolios as well.
If you know anyone who is retired, you’ve probably heard someone say “I’m busier now than I ever was.” It’s very easy to jump from one rat race to the next. The catch-up edition of the ‘Honey Do List’ from your spouse can be a full-time effort in and of itself!
Thinking about how you’d ideally like to spend your retirement years can be fun. Travel. More time with family and friends. Learning a new language, a new skill or taking up a new sport. Starting that business you’ve been thinking about. Whatever…
Making any of those ideas a reality will take some planning. The problem is, many people feel too busy to devote much time to preparing for retirement. Don’t fall into that trap.
A 2015 study by HSBC found that 73% of retirees had not been able to realize one or more of their aspirations in retirement. If you’re fine with that, no worries. But if you’d like to realize your dreams for retirement, preparation is key.
Savvy pre-retirees carve out time to put steps in place that will make their transition less abrupt. A prominent journalist I recently interviewed shared that he began to think seriously about phased retirement when he turned 60, a good 10 years before he transitioned to a part-time relationship with his employer. His planning and the groundwork he laid paid off. He reports that he is “living exactly the life today that I had hoped for and planned for.”
Think about the last major purchase you made. How much research did you do before you pulled the trigger? How much did you kick the tires before you decided? Thanks to the Internet, we have the power to find out a lot about products before we commit.
It should be the same with planning for life during retirement. The amount of information you can scope out in advance will be directly proportional to how well you make the transition.
Let’s say you’re ahead of the game. You’ve thought through what you really want to do after your primary career. You have a clear vision of what you’ll really find satisfying. You’ve even made time to lay the groundwork. So far, you’ve done the right things.
But how much of this have you communicated to your significant other? If you’re in a relationship, retirement planning not just up to you. I see too many people surprised to discover that their partner has different ideas about retirement – quite different!
You meet some people who are 5 years into their retirement and they have had an amazing diversity of experiences. On the other hand, you meet others who have also been retired 5 years and it sounds like they have had 1 year of retirement repeated 5 times.
The biggest trap is falling into familiar routines too soon and not taking full advantage of the opportunity to try new things. Beware: it’s all too easy to stay with our default settings.
In their outstanding book Refire! Don’t Retire, Ken Blanchard and Morton Shaevitz counsel retirees to be wary of ruts and actively seek new experiences. They share an example of couples who agreed to form a Serendipity Club. The agreement is that if one of the members calls you and your spouse to go to dinner at a new restaurant, you agree to go and give it a try. This may not be for you, but it’s an example of how retirees can begin to form new patterns of living that make retirement fresh, not routine.
In retirement, freedom and options come a-plenty. Smart retirees avoid jumping in right away and getting swept away by activity and other people’s agendas. They develop a clear sense of how they want to balance their time so they can target the activities most important to them.
If you want to get a jump start on your retirement planning, start with these six actions you can take now, before you retire:
So, how about you: when was the last time you tried something new? What did you learn? It’s never too early to get started on preparing yourself for that dream retirement, and trying new things is good for anyone, no matter where they are in life.