Dr. Daniel Crosby, Ph.D., President, IncBlot Behavioral Finance
If you ask adults aged 40, 50 or 60 about their outlook for retirement, you’ll receive widely different answers. As we age, expectations for our own retirement take shape and soon become an immediate reality. Our career paths and savings history are suddenly prominent plot lines in our life story, and they become the foundation for the next chapter in life. No matter your age, it’s critical to examine your expectations for retirement and how closely they match your personal, financial and professional reality.
Retirement Misconception 1: Choosing when to retire is easy.
Today, the choice to retire is less influenced by age than it is by financial considerations, health conditions or family responsibilities. For example, women in particular are more likely than men to plan for retirement to coincide with a partner’s retirement plans. The voluntary or involuntary choice to retire affects satisfaction with the retirement experience. Studies by Ohio State University revealed that forced retirement (due to poor health, company lay-offs or another reason) resulted in greater difficulties in transitioning away from work. In contrast, adults who made a voluntary choice regarding the timing of their retirement were more likely to adjust successfully.
Retirement Misconception 2: Retirement is the end of my career.
Retirement isn’t a finish line; nor is it a finite point in your career. In fact, about twice as many Americans aged 65+ continue working today compared to twenty-five years ago. While many of these adults continue to work to supplement retirement savings, others work for pleasure in part-time roles, advisory roles or as mentors to younger professionals. Retirement doesn’t mean ‘not working.’ Rather, it is an opportunity to pursue projects more closely related to your passions or to take on projects that didn’t fit in your busy professional schedule.
Retirement Misconception 3: The transition to retirement is easy.
Simply put, retirement isn’t easy. In fact, retirement is a major lifestyle change that affects physical, mental and emotional health. Consider that work typically occupies at least 8 to 12 hours, if not more, of your day. When faced with an expansive quantity of time, many retirees find that their chores, hobbies and daily plans aren’t as fulfilling as expected. The struggle to fill the professional void with additional activities is often accompanied by emotional challenges. Those who held high-stature career roles tend to struggle the most in defining their personal identity in retirement. If you’re nearing retirement, begin thinking about how you’ll spend your days.
Retirement Misconception 4: I’ll take better care of myself in retirement.
Retirement is one of the most important times to improve personal care. When faced with extra time, retirees usually have the best-laid plans for new exercise routines and healthier dietary choices. In reality, if an exercise routine and healthy diet were not a part of your life prior to retirement, you are not likely to make drastic health and lifestyle improvements now. However, physical activity and personal interactions are important components of a healthy retirement. Savvy retirees combine activities such as hobbies, part-time jobs or volunteer roles that require moderate daily activity.
Retirement Misconception 5: The money I’ve saved will last long enough.
As retirees transition from amassing wealth to spending it, sound financial management is of the utmost importance. First-year retirees are the most likely to overspend as they plan vacations and adventures. In reality, retirees must understand the delicate balance between time and money throughout retirement. Income often becomes smaller and more fixed as the amount of time to spend it drastically increases. As you structure your retirement spending plans, it’s critical to evaluate your monthly living expenses and to develop a plan for end-of-life care. Meetings with your financial advisor should continue regularly throughout retirement in order to ensure you remain on target financially.
No comments:
Post a Comment