Reinventing Yourself, Planning for Retirement

There are 76 million or more of us Baby Boomers who will be retiring between this year and 2030. Most of us aren’t a whole lot older than our Social Security system which we begun in 1935. An interesting fact is that Germany set up their old age pension in the late 1800’s. They were the ones that determined that 65 was the magic age because at that time only 1% of the population lived beyond age 65. If we wanted to only pay Social Security to the oldest 1% today we would be waiting until age 86 to retire.

Retirement is not an event but instead is a life process and a life developmental stage. Multiple authors have proposed stages (identified through numerous scientific studies) that attempt to explain our passage through the years of retirement. (Atchley, R.C. 2000) proposes the stages as 1) Pre-retirement, 2) Retirement, 3) Disenchantment, 4) Reorientation, 5) Retirement Routine and 6) Termination of Retirement.

Many of us Baby Boomers still cannot fathom how we got to be old enough to need to start thinking about retirement. It is easy to stay in denial to the bitter end and not do much planning regarding retirement. Many people of all ages tend to go through life on autopilot. They follow the path of least resistance and don’t really plan ahead to create a specific kind of life. At any point in their life they are not sure how they got there and they are not sure where their life is going next. They may have some dreams “for someday” but if they don’t have a specific plan then that all they will have is dreams.

Pre-retirement is the best time to get your thoughts organized regarding your future retirement. You can get your imagination involved as you consider what your ideal life in retirement would look like. You may be looking forward to retiring and have a plan to retire at 62. Or maybe you will wait until 65 for health insurance reasons. Or maybe you do not plan to retire at all. You love your job or you love the money it brings and you never want to retire. Whatever is your dream retirement or dream no retirement, make plans now.

Notice the last paragraph talked about what you “want” regarding retirement. You may have a specific time that you WANT to retire or maybe you do not WANT to retire at all. But be aware that close to half of retirees do retire earlier than they had planned. Some of the reasons for early retirement include a gradual or sudden deterioration in health, the occurrence of disability, getting laid off from your job and not being able to find another, or needing to take care of ill family members. Retiring earlier than planned often has a negative effect on the retiree’s financial situation and income issues may be paramount. Not to mention the psychological stress from being forced to retire. Retirement in general takes some emotional adjustment, but just the idea that one has to retire rather than wants to retire can cause severe emotional issues.

Some suggestions should fate throw something at you out of left field and you find that you are retiring a lot sooner than you expected:
1-Don’t make an impulsive or sudden decisions, especially financial or relocation decisions.
2-Anger, denial, anxiety, shock, grief are all normal initial emotions in a situation of this kind. Talk with family members, spouse, colleagues, friends, your family health care provider or even a therapist if needed to help sort through everything you are feeling and thinking.
2-Retirement doesn’t need to be forever if you don’t want it to be. Brainstorm possible options for review. If returning to the workforce full-time is out of the question, how about part-time? Or maybe a volunteer position?
3-It is imperative that you are covered by some type of major medical insurance, even if it comes with a $10,000 deductible. $10,000 in medical bills can be eventually paid off but several hundred thousand dollars of medical bills are all too common and can destroy your financial situation permanently.
5-See what benefits you may be entitled to such as unemployment, Medicaid, Social Security disability, SSI, etc.

Common planning errors related to retirement in general include:
1-Lack of pre-retirement planning in general, either financial or otherwise.
2- Living through retirement on autopilot without any specific plans or goals.
3-Reaching retirement age without developing any hobbies or interests outside of work.
4-Expecting your family members (spouse and children) to devote all their time to you and your needs.

When planning for retirement, the best overall strategy is to “Hope of the best, but plan for the worst.”