WORKING AT RETIREMENT

You really need to work at retirement these days.

What kind of retirement do you want? Where do you want to live? How do you want to spend your time? Who do you want to spend it with? What are your goals for retirement? Whoever worried about these issues before?

Yes, money issues are important in retirement. Do you have enough to retire on comfortably? Is there a danger you will run out of money? But equally important—many retirement experts would say even more important—are the emotional and psychological issues surrounding retirement.

To get you in the right frame of mind about retirement, it might help to think of retirement as a full-time job, a new career with its own challenges, stresses and rewards. When you seek a new job or career, you ask about pay and benefits, of course. But aren’t you also concerned about the emotional and intellectual rewards of the job? What are the working conditions? Are you going to look forward to going to work every day? Will you like the people you’re working with? What do you want to accomplish in your new job? In short, shouldn’t retirement be the perfect job?

Perhaps you’ve never thought of retirement this way. But consider the problems that often arise out of retirements that aren’t properly planned.

Loss of identity. Many of us—particularly career-successful people—find their personal identity is wrapped up in their work. When people ask us who we are, we reply, I’m a business owner, a corporate executive, an attorney, a teacher. When we retire, we lose that identity. We may respond, “I’m a retiree,” but that doesn’t have quite the same ring or emotional feel.

Successful people in careers invariably have clear, firm goals: I want to build my own company or I want to be president of the firm. Apply the same goal-orientation and desires to retirement planning. It may be an identity that’s linked to your career. For example, former small-business owners may serve as paid or volunteer advisors to those starting up their own small business. Or it may be something quite removed from your working years: taking up painting or writing, for example. Perhaps replying, “I’m a painter” or “I’m a writer” has a more fulfilling or descriptive ring than, “I’m a retiree?”

To get a handle on what their clients really want to do in retirement, what their passions are, financial planners often ask thought-provoking questions such as:

If you had all the money you could ever want, what would you do?

If you had only five years to live, but would be healthy the entire time, what would you   do?

Boredom. Another psychological fallout of a poorly planned retirement is boredom. That’s why it’s increasingly common for “retirees” to return to the workforce, at least part-time. They realize they could easily spend 20, 30, perhaps even 40 years in retirement, much of that in good health, and they soon find golf and traveling quickly grows old.

One way to avoid boredom is to practice at retirement before you retire. If you think you’d like to take up painting or carpentry in retirement, don’t wait until the day after you receive your gold watch to start. Start five or ten years before retirement exploring this new career. Take some classes, for example. You may have to try out several retirement “careers” before you find something comfortable and fulfilling. The same principle applies to deciding where you want to live during retirement.

Conflicts with spouse. Another factor to keep in mind is that your new career will probably involve another person: your spouse. Before, you went off to work. Now you’ll likely be home more. Do both of you envision the same retirement goals? What if your spouse wants to travel a lot but you just want to stay home and play golf, or you both want to share the same home office? These issues need to be resolved as much as possible in advance.

Failure to realize that retirement comes in stages. Retirement is not linear. Retirement experts now recognize that retirement comes in stages, ranging from healthy and financially comfortable when you first retire to health problems and health costs in later years. Keep these stages in mind when you plan your retirement career.

January 2002— This column is produced by the Financial Planning Association, the membership organization for the financial planning community, and is provided by McGuire & Co., LLP, a local member in good standing of the FPA.