The one thing baby boomers never seem to tire of is talking about when we plan to retire. However, in all these discussions, we always seem to focus on what we are retiring from, with little thought or real plan on what we are retiring to.
What can we expect in retirement, and how can we best prepare ourselves to maximize our opportunities and enjoyment of this important and hopefully, long stage of our life?
What events will trigger our retirement readiness? Reaching financial freedom or attaining a significant age? Perhaps a health setback or the death of someone close? Or might it be an unexpected career setback?
What will life look like after work? If we’re in a relationship, will our partner retire at the same time? Will we volunteer, or work part time, or perhaps start a new business? Do we want to travel more or spend more time with our grandchildren? What hobbies or activities do we want to have more time to enjoy? Have we started them, so that we know what to expect?
We need to have a purpose to make life worth living. What will yours be?
We also need to consider the risks we face with longevity. Most of us retire earlier and live longer. Might we outlive our money during our 25 to 30 years of retirement? Inflation over that period of time will have a huge impact. Will our income keep up? Given the impact of stock market volatility, particularly when we’re drawing down on assets, how will a serious market decline affect our plans? Are low interest, tax inefficient investments even viable any more?
We live in a new ‘sandwich” generation, where most middle age people have more parents than children. Will we need to take care of both?
What will happen when our health or that of our spouse fails? Do we have the resources or insurance to cover the extra expenses and care we will need?
What government pensions, benefits, and entitlements will we be able to depend on, particularly since many more of us will be needing these at the same time?
The next time we think about when to retire, let’s also incorporate what we are retiring to, and plan the successful transition to this next phase of our life.
“Maslow’s Hierarchy of Needs” illustrates below how some needs take precedence over others. For example, beyond our basic need to survive follows broader needs, including our need for safety and security, for love and belonging, for esteem, and to realize our own potential and fulfillment. Alongside of Maslow’s Needs Pyramid we include an Income Solutions Pyramid to address how we can financially provide for each tier of our own needs.