RETIREMENT READINESS IS NOT JUST ABOUT MONEY

By Craig Erwin, Ph.D.

You can accumulate millions of dollars, but it takes more than money to retire; it helps to be emotionally ready. If you retire before you are emotionally ready, with little or no preparation, you may be miserable after retirement, bored to death and dreaming of going back to work.

Like much in life, your happiness in retirement is affected by your expectations. If you dream about retirement for decades, counting down the days and bragging to everyone about how wonderful retirement will be, it might just be impossible for retirement to meet your expectations.

A friend of mine, with one child in college and two younger ones, just turned 50. He tells me frequently that all he wants to do is retire. Clearly, he won’t be able to retire financially for at least another decade, even if everything goes well. But as much as he thinks about retirement, It will be awfully hard for it to meet the steep expectations he is building.

Finding what makes you happy after you retire may take some practice. Even though senior citizens tend to be happier than young people, that doesn’t mean you will suddenly be happy when you retire. You might be disoriented at first, unsure what to do, where to go, or whom to see. Unlike during your working years, after you retire, you may have too much free time and too many activities to choose from. Most of us need structure. Having unlimited free time and being able to do nearly anything we want may frustrate us. Too many choices! Unable to decide what to do or where to go, we may become upset with ourselves for spending all our time trying to decide what to do and ending up doing little or nothing.

We often think happiness results from reaching destinations, such as graduation, marriage, or retirement, but happiness is something we experience daily during our journeys to these destinations, not what we experience at the end. Arriving at a destination such as retirement may well be a let-down, in part because we have built such high expectations around it. As Charlie Munger, Warren Buffet’s business partner said, “the secret to a happy marriage is to find someone with low expectations”. Low expectations certainly make happiness easier to achieve.

It is wise to practice retirement before you retire. Figure out the places you think you’d like to retire and then vacation at each to test them out. Some folks, before they retire, criss-cross the country with a camper, staying in various places on their short list in an effort to find the place they want to retire most.

It’s usually unwise to choose a place to retire without having been there. If you plan to spend decades living in a city or town, it pays to check it out thoroughly and spend some time there before you retire. When I was almost 40, I was accepted by a University of Arizona Management graduate program in Tucson, committed to go there, and moved there without ever having visited Tucson. I sure wish I had kicked the tires more. Although Tucson is a beautiful and wonderful place, its hot, arid climate combined with my allergies to make me miserable for the five years I lived there. Visit the place you plan to retire multiple times (in different seasons, if possible) and stay there at least a couple of weeks to try it out.

It’s also a good idea to practice retirement because you may learn that you aren’t cut out for an abrupt retirement. You may need to transition into retirement, perhaps reducing your hours or working part-time before you quit for good.

In preparation for retirement, my neighbor sold his business, but he did not want to stop working all at once. He agreed to work with the new owner part-time for a couple of years to ease his transition to retirement and to help ensure the new owner’s success.

Some of us work forty or fifty years and then drop dead shortly after retirement, unable to handle life without a job. If you find out that you don’t know what to do with yourself during a retirement test-run, or that you are bored to death, or miss the challenges or camaraderie that come with your job, maybe you should re-think your retirement plans or ease into retirement. Perhaps that would give you a chance to develop hobbies, interests, and friendships outside work. And that might be just what you need to hit the ground running when you retire.

So, think ahead and plan ahead and practice retirement. Your retirement won’t be perfect no matter how you approach it, but to avoid misery and regret, you need to think about far more than how much money you’ll need.