What makes you happy about your working life? Is it achieving a larger goal while making money? Or is it having coworkers to share your ups and downs?
Now take all that away. There is no office, no meetings, no quarterly or annual goals. No coworkers and, obviously, no paycheck. Retirement is here and it is real.
For many people, that’s the experience of leaving full-time work, a vacuum that sucks up everything around it. Finding happiness in retirement then becomes the new goal, even if you no longer want your full-time job life.
There is hope, however. One study found that more than nine out of 10 retirees reported that they were happier in retirement than when they worked.
What drives happiness is not necessarily the absence of work, retirees said, but the presence of freedom, of personal control over time. You can always scale your lifestyle up or down to account for money. You can’t manufacture more time.
Good retirement planning is no accident. Here are three fundamental thought processes you will need to conduct in order to ensure your own happiness in retirement.
1. What will you do?
Not everyone wants to work in retirement. Yet some people should. Walk into a big-box hardware store or small retail shop. Chances are, the person at the register is a part-timer with graying hair.
Chat with them and you’ll find that they chose to put on an apron and go back to work to fill up free time, and maybe for a little spending money.
These same folks often held those grinding, 50-hour-a-week jobs with the big-name corporations. Then 65 came around. Maybe they fooled around with golf or gardening for a few months. Then they said to themselves, “To heck with this, I’m bored!”
There’s nothing wrong with recognizing your interest in working at least some in retirement. Just remember to recalibrate your investments. It’s easy to take income from a retirement plan and turn part-time income from a job into play money.
But you’d be better off later in life if you let that retirement fund compound in stocks for a few years longer.
2. Where will you do it?
Downsizing in retirement is normal. Kids leave and big houses turn into echo chambers for a single person or an older couple. Stairs become a hazard, bathrooms need better safety features.
Another typical focus in retirement is chasing the sun and perhaps tax relief by moving to a state with low or zero tax rates. Some states specifically target retirees in this way.
Yet happiness in retirement has as much to do with who is around you as where you are. Moving five states away from children means expensive flights to see grandchildren. Buying a newer retirement home can wipe out equity and maybe even result in a mortgage.
Make sure you count up all the costs of changing your life so drastically. Consider renting seasonally for a few years before making a big jump.
3. How will you pay for it?
Income is the key. You need to figure out a mix of Social Security, perhaps part-time work and retirement fund withdrawals that will cover predictable costs.
Yet it takes planning to offset the risk of the unexpected. Insurance costs will be different. Projected healthcare expenses and taxes are part of the puzzle.
Owning the right mix of investments, one that takes into account the external factors that can affect your plan, including inflation, is crucial.
Like control over time, control over uncertainty is paramount to finding happiness in retirement. A good plan, one built with professional help, can make the difference between worry and serenity as your life changes for the better in retirement.
