retirement

Test-Drive Your Retirement

Before you quit your job, try out your new budget and your new lifestyle.

Bev Bachel, 62, is trying retirement on for size. For years, Bachel, a freelance communications professional in Minneapolis, took on highly demanding contract jobs that typically lasted more than a year. She put in long hours, often managed other writers and had to be available for on-site meetings.

“A friend of mine said that when you’re self-employed, you never really retire. You just wake up and realize all your clients are gone,” she says. “I thought, Oh my God, I need to exert control instead of experiencing a slow decline into nothing.”

So, two years ago, Bachel decided to cut down on big projects, travel extensively—including lengthy trips to Panama during the Minnesota winters—and take on work that she could do anywhere, anytime.

She also watched her savings decrease instead of increase. “I have 40 years of ingrained patterns and being rewarded for saving versus spending,” she says. “Now I have to make a mental shift.”

How to do it right

The idea of test-driving retirement—whether by cutting living expenses, staying for a few weeks at a potential retirement des­tination or hanging out at home for a week without work—makes sense to a lot of people. But it’s not easy.

“Test-driving retirement gets more attention in the press than it does with clients,” says Mari Adam, president of Adam Financial Associates, in Boca Raton, Fla. “I’ve had people do it in bits and pieces.”

The classic way for a couple with two incomes to try out retirement is to start completely banking one income, Adam says. She advises them to practice living on that amount of money. “People getting ready to retire often have no idea what they really spend,” Adam says. “They make up a number in their head.” Figure out what you’re realistically going to have coming in and going out, including Social Security and withdrawals from a retirement account or pension.

For nearly two years, Fritz Gilbert and his wife, Jackie, lived on the income they expected to have in retirement. Gilbert retired on the young side—55—from his job as a global commodities trader in Atlanta. Jackie never worked outside the house, first raising their daughter, then caring for her mother, who suffered from Alzheimer’s.

“We increased our savings, basically getting our net take-home pay down to what we expected to live on in retirement,” says Gilbert, who writes the Retirement Manifesto blog. And a year before retirement, the couple decided to “track every penny we spent to get a baseline spending level,” he says. “We’d never done that before, and it was a pain.”

Gilbert, who says he may be more farsighted than most, mapped out as best as possible what their spending—from health care to travel—would look like over the next 40 years, year by year.

He and his wife also practiced staying at home for about 10 days. “Everyone focuses on finances. But once that’s in place, the non-financial stuff is key to getting it right. The more we can do to think of the softer side of retirement, the better our retirement will be.”

The retirement staycation

Joe Casey, a managing partner for Retirement Wisdom, a retirement coaching service in Princeton, N.J., has advised several clients to try out retirement by taking one week of a month-long vacation to stay at home. “You need to slow down first,” Casey says. “People have to set their expectations properly for a test-drive.”

The idea isn’t just to plop down on the couch in front of the TV, but to start figuring out how to structure your days if you aren’t working full-time. For instance, what time should you get up? How much alone time should you have, and how much time doing things with others?

Of course, it’s only a week. But in that time, some of his clients have realized they want to pursue interests they currently don’t have time for, such as auditing classes. And they all recognized that not working leaves far more time to exercise and take care of themselves. The retirement rehearsal, Casey says, helps his clients shift “from fearing to anticipation.”

Try out a new location

If your picture of retirement involves living somewhere warmer or quieter, don’t commit to moving without first staying in the area for longer than a few weeks—perhaps in an Airbnb, VRBO or other short-term rental.

Terry Feinberg and his wife, Carla Ruigh, learned that lesson the hard way. Both are 62 years old. She is retired from her job as a municipal employee; he is semiretired from a career in marketing. They live in Gilroy, Calif., on two-and-a-half acres, and five years ago they faced a mini-disaster: The main water line from their well broke.

“We thought, What happens when we get to the point where we’re no longer able or want to maintain this property?” Feinberg says. “We decided we needed to think about an exit strategy.”

He and Ruigh love the desert and Southwest, so when he came across an ad for a brand-new 55-plus retirement community in Mesquite, Nev., it seemed ideal. They went out to look at the place “with zero intention of buying,” says Feinberg. But they really liked what they saw, and a few days later they were the proud owners of a brand-new house on a quarter-acre lot.

They rented out their new house for the first three years, then moved to Mesquite in March 2018 and rented out their Gilroy place. That’s when they realized that they should have spent a little more time in the desert and done a little more research.

“I looked at historical weather data but didn’t go deep enough into how it would affect our lifestyle,” Feinberg said. “It hit 110 degrees in June and didn’t drop till late September. Often it wasn’t below 90 at night.”

It was so hot during the day that they had to start their biking and tennis around 5 a.m. And it was too hot at night to use their nice backyard or patio.

Look into health care, too

The couple were also worried about their health care. Their HMO had recently changed its rules, and they could no longer use it after they moved to Nevada. Plus, they became concerned about the shortage of doctors in the Mesquite community and the lack of access to specialized care if they needed it.

So they put their new home on the market, reached an agreement with their Gilroy tenants for them to move out, and moved back to California. In the end, they came out fine financially, Feinberg says. But psychologically, the hard work of moving took its toll. They have no plans to move again in the foreseeable future.

“If I were to give advice to someone looking to make a significant geographic move, it would be to do it temporarily, if possible, so you can really understand what it’s like to live there,” he says. “Experience the weather and lifestyle before completely pulling up roots.”

Most Popular

Tax Wrinkles for Work-at-Home Employees During COVID-19
taxes

Tax Wrinkles for Work-at-Home Employees During COVID-19

Are your home office expenses deductible? How does going out of state to work for a while affect your tax picture? There are some interesting wrinkles…
November 9, 2020
Retirement: It All Starts with a Budget
personal finance

Retirement: It All Starts with a Budget

When you’re meeting with your financial planner, do you talk about your budget? If not, you should.
November 10, 2020
Will Joe Biden Raise YOUR Taxes?
taxes

Will Joe Biden Raise YOUR Taxes?

During the campaign, Joe Biden promised that he would raise taxes for some people. Will you be one of them?
November 10, 2020

Recommended

Peering Past the Pandemic
Travel

Peering Past the Pandemic

I’m looking forward to a time when lunches with the girls (or guys), volunteering and travel will resume.
November 24, 2020
11 Year-End Moves to Lower Your 2020 Tax Bill
taxes

11 Year-End Moves to Lower Your 2020 Tax Bill

What you do between now and the end of the year can have a significant impact on how much tax you have to pay next April.
November 17, 2020
13 States That Tax Social Security Benefits
social security

13 States That Tax Social Security Benefits

You may have dreamed of a tax-free retirement, but if you live in these 13 states, your Social Security benefits are subject to a state tax. That's on…
November 16, 2020
Planning to Sell Your Home in Retirement? Downsize Costs Along With Space
Budgeting

Planning to Sell Your Home in Retirement? Downsize Costs Along With Space

In this hot real estate market, consider the costs of buying and selling a house along with the expenses associated with your new digs.
November 13, 2020