Shakespeare probably didn’t realize it when he wrote his immortal line, “All the world’s a stage, and all the men and women merely players,” but he could easily have been writing about pre-retirees. If life is indeed a stage, then those about to play out the final act of their life—retirement—would do well to rehearse it before they actually retire.
Start “rehearsing” a good five years before your planned retirement date, keeping in mind that this will be your life for the next 20 to 30 years. Here are a few ways to rehearse.
Try out your retirement lifestyle. Start by envisioning what kind of retirement life you want to live. Do you want to play golf, travel, see the kids, spend time with friends, take up a hobby, work part time, volunteer, go back to school, or enjoy a mix of activities? If you’re married, discuss your plans together. Then try it out.
Let’s say you plan to sell the house, buy a huge RV, and travel the country. Practice this by renting an RV and going on the road for as long a vacation as you can take. Perhaps you’ll quickly find out that three weeks on the road in an RV gets old.
Figure you’ll golf every day? Take a two-week vacation and golf every single day. Is that what you really want to do all of your retirement years? Perhaps you don’t have any hobbies. Try some out. Want to paint but never put brush to canvas? Again, try it out extensively on weekends or vacations.
Want to relocate in retirement? Rent there, talk to other retirees, and get a feel of the cost of living. Also, vacation there at different times of the year. The place may be beautiful but the winters might be rainy or the summers boiling. Do both of you like this lifestyle? It’s common for one spouse to have a different image of retirement than the other. Work it out now, before you retire and commit to an expensive move or lifestyle you’ll regret.
Rehearse with your spouse. One of the biggest retirement adjustments can be spending 24 hours a day with your spouse. Each of you has spent much of your time apart with careers or with one of you at home and the other one at work. Take a week’s vacation and spend it at home, getting up each day with no plans. Maybe part-time work or separate hobbies suddenly look more appealing.
Rehearse living on your retirement budget. Add up expected Social Security benefits, pension income, 401(k) withdrawals, annuities, individual retirement accounts—whatever sources you can count on—and calculate what income you can realistically expect to live on each month once you retire.
Be realistic. Many financial planners caution against withdrawing too much annually from your 401(k) or other savings, or you risk running out of money. A “safe” percentage is around four percent—perhaps a little higher your first years of retirement if the markets go well and you know you’ll cut that percentage down in later years.
Most likely, your retirement income will be less—perhaps considerably less—than your pre-retirement income. Try living on that reduced income for a couple of months. You’ll probably have to fudge expenses a bit—some expenses you have today such as investing for retirement and perhaps the mortgage will probably disappear by the time you retire, and you’ll add others, like travel. But you’ll get the idea. Can you live on it? Does it feel comfortable? Or do you need to do some serious last-minute saving or postponing of retirement to make it more comfortable?
Rehearse by “semi-retiring.” Retiring from a career is often more difficult than people realize. Their identity is often tied up in their work, and many find they miss the mental challenges and the social relationships. That’s why financial planners find retiree clients often returning to work—out of boredom. Ease into retirement by working part time, either by cutting back hours at work, or starting a new job. Use the extra time to rehearse those other aspects of retirement.
A little rehearsal and you may find you’ll earn rave reviews—from yourself—when you step out on that retirement stage.
This article was submitted by the Financial Planning Association, the membership organization for the financial planning community. FPA members are dedicated to supporting the financial planning process in order to help people achieve their goals and dreams. Submission of this article does not imply an endorsement or recommendation of the Financial Resource Center site.
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