The Biggest Oversight in Most Americans' Retirement Planning

I typically use this column to answer a question that a reader sends me, or to answer a query from a caller to my weekly radio broadcast, Hanson McClain’s Money Matters. I’ve chosen to take this column in a unique direction because I want to address what I consider to be a major issue facing people over the age of 50: inadequate or improper retirement activity planning.

For the past quarter century, I’ve been a practicing financial adviser and have spoken with thousands of people about their transition into retirement. Financially speaking, many folks do a good job of planning. They invest the maximum in their employer’s retirement plan, they keep their debt under control, and they have additional investments such as stocks or real estate.

Yes, many people are well prepared for the financial demands of retirement.

But where most people come up short is in their preparation for the mental and emotional demands of retirement. Simply, they’ve spent the past 35 to 40 years saving money, but they haven’t spent much time at all thinking through how they want to invest their time once they retire.

Over the years I’ve noticed that many people move into retirement with a sense of excitement—and perhaps even a bit of anxiety—but have given very little forethought to their actual goals. Oh sure, they might have the goal of traveling to Europe, or fishing in Mexico, but they haven’t spent nearly enough time on how best to use their unique skills and abilities during this next chapter of life.

Believe me, if you’ve had a career, while you may believe that what you most want is to relax, you aren’t going to be satisfied spending all of your time recreationally.

I find it ironic that most of the successful people I know have done a lot of work planning and preparing for their life prior to retirement. For example, a young woman will go to college to help launch her career. She’ll proceed to work hard and look for ways to move up the professional ladder. She’ll attend conferences where she’ll network with others. She’ll continue her education, and even use personal assessment tools to help her better understand her strengths and weaknesses.

But most people do very little avocational planning when preparing for retirement. They just figure they’ll “take it as it comes,” and do the plotting once they stop working. My experience has been that those who put the most time and effort into planning prior to the day they stop working lead much more meaningful, rewarding and interesting lives.

A person can do a lot of good when she doesn’t have to worry about bringing home a paycheck. It can be a time of service to others, an era of newfound creativity, or even the perfect time to start a new business.

With proper time management and active planning, retirement, and all the freedom that comes with it, can be the best season of life. Unfortunately, for far too many people, retirement is one big disappointment. Small marital issues can become major problems once couples get to spend unlimited amounts of time together. Loneliness, depression and alcoholism are also common afflictions of thousands of retirees.

So while you’re organizing your finances for retirement, start to create some worthwhile goals. Take a little time each and every week to determine what you’re truly great at, along with what various interests you have, what topics you would like to learn, and what experiences will provide you with the most satisfaction. Then, look for avenues in which to employ those skills and goals. It may be that you’ll write a book, go back to college, take a management or volunteer role with a non-profit, or even mentor students or young professionals. If you plan today, the options are almost limitless. The important thing is that you realize that retirement isn’t the end of anything. As long as you plan and prepare for it, it’s actually the beginning of new pursuits.

I’m sorry to say that far too many retirees—people I have known and worked with for years—end up spending large chunks of each day sitting in front of the television.

So start planning what you want your retirement to look like. If you aren’t sure how to begin, talk with family and friends about what they could see you doing. Force yourself to embrace the newest technologies. Engage with a non-profit today so that you can figure out what your best role would be once you retire. Don’t wait. Determine today what will bring you a sense of purpose, joy and satisfaction tomorrow.

Scott Hanson, CFP, answers your questions on a variety of topics and also co-hosts a weekly call-in radio program. Visit MoneyMatters.com to ask a question or to hear his show. Follow him on Twitter at @scotthansoncfp.