I am seeing an interesting pattern in discussions with my clients about retirement — and it’s certainly not one I was expecting. Instead of worrying about whether they’ll have enough saved to enjoy retirement, they’re worrying about whether they’ll enjoy retirement at all.
It seems like discussions about retirement start almost as soon as we get our first job. Whether it’s saving as much as possible in your 401(k) plan or making an annual IRA contribution, the focus is always on having enough money to retire and enjoy all the things they’ve been dreaming of doing. For some, the big plans include traveling to far-flung destinations; for others, it’s spending time with family, finally moving to that place you love to visit on vacation or volunteering.
As financial planners, we talk about these dreams as goals and put dollar amounts on them with anticipated timeframes around when you could expect to achieve them. If you have been worried about market ups and downs over the last few years, concerns about withdrawing funds when the account balances may be down from the peak value are real. To address this worry, ask your financial planner to “stress-test” your retirement projection using lower capital market return expectations in your financial plan or consider having a bear market when you begin taking your distributions.
Client has second thoughts as she nears retirement
As we diligently make progress on achieving those retirement dreams, we don’t spend as much time as we should thinking about what life may actually look like in retirement. Recently, I spoke to a client who says she would like to retire at the end of this year. We have been working toward her economic freedom for years, and she has enough assets to help make all the dreams she has expressed come to fruition. We got to the end of the financial plan discussion, and I was all set to celebrate starting the countdown to the long-awaited retirement date.
But there was a pause, and then she said, “I don’t know if I can actually start to withdraw the money and feel good about it. I have been so focused on saving, investing and planning for years that I don’t know how I will feel about starting to take money out, even if it’s for things I think I want.”
She went on to say that she always thought she wanted to move to another state to be close to her extended family, but she now realizes that they are going to be busy with their own lives, and it won’t just be fun all the time like when she visits now. And if her family won’t be able to see her multiple times a week, then maybe she doesn’t actually want to live in that state and make a major lifestyle adjustment to weather climates she doesn’t enjoy year-round and not being able to walk on the beach every day.
She shared that she worries that the photography and golf hobbies that she feels like she never has time to enjoy now won’t be enough to fill her days. She has traveled extensively already, and the list of places she still wants to visit is getting shorter. In other words, her biggest worry about retiring is what she is going to do with her time when she retires — even though she says frequently, even now, that she can’t wait to stop working.
I have had similar conversations with physician clients who start our discussions by telling me that they are very stressed, and the only thing they want to do is close their practice as soon as financially possible. And yet, when we work through their wealth management plan and show that they have more than enough assets to walk out the door tomorrow, they can’t do it. For some people, retiring from being an expert in their field or having a prestigious job feels like giving up part of the identity they have worked very hard to earn.
How to cope if you’ve got cold feet for retirement
So, what do you do when the hardest part about retirement is actually retiring? The most successful transitions to retirement I have helped clients implement start years before the planned retirement date or have elements that help ease them into decisions. Here are some ideas to make retirement the next step in a journey, not a final destination:
Consider slowing down at work instead of stopping completely. Working part time allows you to have the best of both worlds: continued income and a day-to-day sense of purpose, as well as the time to pursue hobbies, travel and leisure.
The physician who wanted to walk away from his practice is now working only three days a week, happy to still be caring for patients while being able to participate in his teenager’s school and sports activities.
Try before you buy. If relocation is in your retirement plans, you can similarly take a new location for a test drive before committing to living there full time. In the case of the client who might want to live by her family but really likes her current home, I recommended that she rent a house for a year in the new state to see if she can deal with the weather, and if her extended family’s lifestyle suits her before she sells her current home.
She can rent out her current home for some income, or she can just come back home for a break during the very hot or cold months in the new state.
Plan to explore new things. While you may have a few hobbies that you enjoy now and want to pursue in retirement, you can also plan to try out new experiences to keep your day-to-day life fresh and interesting.
Many people find that volunteering gives them the purpose that working used to fulfill — but without the stress. You can also explore those activities that you always thought sounded fun — like learning to paint, ballroom dancing, playing pickleball, running triathlons or taking a series of cooking classes — but never had time to do before.
“I am busier now that I am retired than I was when I was working” is a common theme I hear from clients, but now the activities are things they have worked hard to be able to enjoy.
Having your financial adviser work with you on planning for your life in retirement as well as your finances can help ensure the transition you make can be happy and fulfilling.
Mercer Advisors Inc. is the parent company of Mercer Global Advisors Inc. and is not involved with investment services. Mercer Global Advisors Inc. (“Mercer Advisors”) is registered as an investment advisor with the SEC.
All expressions of opinion reflect the judgment of the author as of the date of publication and are subject to change. For financial planning advice specific to your circumstances, talk to a qualified professional at Mercer Advisors.
Kara Duckworth is the Managing Director of Client Experience at Mercer Advisors and also leads the company’s InvestHERs program, focused on providing financial planning to serve the specific needs of women. She is a CERTIFIED FINANCIAL PLANNER and Certified Divorce Financial Analyst®. She is a frequent public speaker on financial planning topics and has been quoted in numerous industry publications.
2024 Election: Tax Plans of the Presidential Candidates
Tax Letter Joy Taylor reviews the tax plans of the 2024 election candidates. With a raft of tax provisions due to expire in 2025, the tax stakes couldn't be higher.
By Joy Taylor Published
Tennis Channel To Serve Up New Streaming Service Next Year
The Tennis Channel's direct-to-consumer streaming service will include live and on-demand matches as well as original programming.
By Joey Solitro Published
Year-End Tax Planning for a Financially Healthier Retirement
Getting your tax ducks in a row for the end of the year can decrease your tax liability and make the most of your income, now and in retirement.
By Ryan Marston, Investment Adviser Representative Published
Where to Start Financially After a Life-Changing Diagnosis
Dealing with an illness, yours or your child’s or that of another loved one, is hard enough without adding financial duress. Here are some considerations and suggestions for covering expenses.
By Stephen B. Dunbar III, JD, CLU Published
Six Ways to Prepare for Widowhood and Protect the Surviving Spouse
No none wants to have to plan for losing their spouse, but having plans in place and knowing what to do when the time comes can alleviate at least some of the stress.
By Tyler Hill, Investment Adviser Representative Published
Creating a Blended Family? Three Key Steps to Consider
Blended families can make your finances and estate extra complicated, but you can head off some of those issues with careful planning.
By Adam Frank Published
Do You Need Disability Insurance?
If you work for a living, the answer is yes, so don’t overlook protecting your biggest asset. Open enrollment season is the perfect time to assess your options.
By Frank J. Legan Published
Retirement Planning in a Time of Inflation and High Interest Rates
Today’s challenges make retirement planning even more complicated than usual, but it’s not all doom and gloom.
By Ken Moraif, MBA, CFP®, CRPC® Published
Not Confident About Retirement Despite Financial Success?
You’re not alone. Uncertainty related to interest rates, government debt, long-term care and market volatility is making everyone uneasy. What can you do about it?
By Barry H. Spencer, Registered Investment Adviser Published
Risk vs Reward: Understanding This Intricate Investing Dance
The stock market can be unpredictable and complex, so having a good grasp on how to mitigate risk is essential.
By Kerim Derhalli Published