Maybe you’re counting down the days the way you used to mark off the calendar before Christmas as a kid. Or maybe you’re already in the early days of retirement, still relishing the feeling of not having to set an alarm to get up the morning. Whether you’re nearing or in the beginning of retirement, you’re certainly not alone: approximately 4.1 million Americans reached retirement age in 2024. Not only that, but around 10,000 Baby Boomers (those born between 1946 and 1964) are reaching retirement age every day between now and the year 2030.
But you should also keep in mind that the first year of retirement is a time of major adjustments—mental, emotional, and of course, financial. After decades of a daily routine built around work, you’re now shifting into a completely different routine, complete with different expectations (both yours and those of the people close to you). The familiar daily landmarks are being replaced by a different landscape, and you no longer have a regular paycheck coming from an employer (even if you were self-employed).
Especially in this first transitional year, it may be important to provide yourself with some new landmarks and routines. As we often counsel clients approaching retirement, it’s important to think about “retiring to,” not just “retiring from.” In other words, your retirement should be built around the purposes, priorities, and goals that have meaning to you. Rather than being a time of wondering what to do with yourself, it can and should be a time when you are able to focus your time and energies on what really matters most to you.
Life First – Money Second
One way to start getting a handle on the mental and emotional side of retirement is to ask yourself some questions that can lead to answers about what you expect from or envision in retirement. We’ve written before about discovering what retirement means to you, and one way to do that is by having a conversation with yourself and asking some deeper questions:
- How do you feel when you picture yourself in retirement?
- If you’re worried or anxious, what is the source of those emotions?
- Or, what are you doing right now that makes you feel most contented?
- Is that something you’d want to keep doing after you retire?
- Imagine yourself twenty or more years from now, looking back on your life. What’s the one thing that you’d most like to be able to say about it?
- What’s the most important thing you want to accomplish?
- How aligned do you feel your money is with what is most important to you?
- What is your favorite way to spend time right now?
- If you haven’t retired yet, do you think that will still be true when you retire?
- If there was a single cause, idea, or group to which you’d most like to give back, what would it be?
- If you want to ‘give back’, would you want to give your time, involvement, expertise, or money?
- Can you tell a story about someone who really “got it right” when they retired?
- What made them successful?
- Or, can you remember someone who seemed less happy after the end of their active career? Why do you think they felt that way?
We believe in the power of asking good questions, so if you haven’t yet taken the time to do some careful thinking along these lines, there’s no time like the present to get started!
Thinking through the Money Part
Of course, as with most other aspects of life, having a grip on the financial side is an important key to a low-stress, satisfying retirement lifestyle. As you go through your first year of retirement, there are some financial conversations you definitely need to have with yourself or with a trusted advisor.
Fine-tune and Monitor your withdrawal strategy. When you begin drawing down your retirement savings, it’s especially important to take into consideration the market conditions. When the market is tracking lower, withdrawing assets that are losing value can have a “double-negative” effect on how long your retirement funds will hold up; not only are you often taking an actual loss, but drawing down assets in a down market also reduces your ability to benefit from a subsequent upturn in the markets.
It is because of the ups and downs in markets that it becomes critically important to fine-tune and monitor your investment portfolio’s mix of assets and your long-term plans confidence level. Particularly early in retirement, it may be necessary to make some adjustments to your original plan in order to keep the ‘pressure’ off your portfolio during turbulent markets. Typical adjustments could be deferring a large expense by a couple of years (i.e. car purchase or home improvement); making a calculated reduction in discretionary spending temporarily; or bringing in another source of income (i.e. filing for Social Security earlier than originally planned). Worthwhile to focus on other assets that are available for providing income.
Check in on your ‘spending pulse’. In the brave new world that is retirement, you no longer have that paycheck showing up every few weeks in the same way you did when you were working. As you go through this first year of retirement, take careful note of your expenses and cash flow patterns. Are there areas where you need to cut back – fluff expenses that don’t actually add to life satisfaction? Are there new priorities for spending that require reallocation from other areas? Did one set of grandkids move farther away, necessitating a bigger travel budget than you initially anticipated? These early years of retirement are the time to make these adjustments to your spending plan so that you can settle into a more predictable routine.
How is your retirement picture shaping up? As you think about those first days when you won’t be going in to the office, how does it feel? Thinking through not only the money side (the “how”) but also the mental and emotional aspects (the “why”) of retirement can help you make the first year of your “second act” smoother and more satisfying.
