By Walter Updegrave
You probably already devote considerable attention to the financial side of retirement planning: how much to save, how to invest, different ways of turning your nest egg into a reliable retirement income, etc. But have you done any retirement lifestyle planning?
Unlike financial planning, lifestyle planning focuses less on money and more on how you’ll actually live your life once you retire.
And just as it’s essential to know whether you’ve got the financial resources to call it a career, it’s equally important to be sure you’re ready to make the lifestyle transition from the work-a-day world to post-career life. You’re going to be spending a good part of your life in retirement. Without the framework of a job to provide structure each day, you’re going to have to find new ways of spending your time that will be satisfying, meaningful and fulfilling.
Of course, the lifestyle you’ll live in retirement is also linked to your finances. You’ll need a much larger nest egg if you expect to travel frequently than if you plan to live a laid-back lifestyle close to home. Ditto if you go into retirement with a mortgage or other debt.
In short, financial planning and lifestyle planning really complement each other. You can’t really do either justice without considering the other.
Here are five tips for getting a start on this crucial aspect of retirement planning:
1. Think Big: One of the most important questions you’ll face in retirement is where you want to live. Will you stay in the same city and neighborhood you’re living in now, or relocate for a change of pace or perhaps to save some money? And whether you stay where you are or move, you’ll also want to consider whether to downsize to a smaller place that requires less maintenance and upkeep.
On the relocation issue, you can check out any number the of “Best Places To Retire” lists that abound on the Net. If nothing else, you’ll get a good sense of the options available. You can then assess living costs at a site like Sperling’s Best Places. As for downsizing, you can scout out real estate prices in different areas by going to a site like Zillow, and then following up with a local real estate agent to get a more detailed assessment of housing and living costs.
2. And Then Think Small: Wherever you choose to live during retirement, you’ll also need to put some thought into how you’ll spend those years. Here, I’m talking about the small-picture issue of what you’ll actually do day-to-day now that a job won’t be soaking up eight or more hours of your time and attention each day.
Going to a tool like Ready-2-Retire, which you’ll find in Real Deal Retirement’s Retirement Toolbox, can help you sharpen your retirement vision. Ready-2-Retire offers icons representing 24 different retirement activities (travel, returning to school, hobbies and creative interests, etc.) that you then drag and drop into three different baskets—Very Important, Moderately Important or Trash—based on how important each is to you. This exercise doesn’t necessary provide actual structure, but it can help you replace vague musing about how you might spend your time with some actual activities.
For a more in-depth and nuanced assessment of what your post-career life might involve, you may want to check out one of the growing number of pre-retirement seminars. One example is the Paths to Creative Retirement workshops offered by the Osher Lifelong Learning Institute at the University of North Carolina-Asheville, where participants explore retirement options and receive guidance on managing the transition to retirement.
3. Do a Trial Run: Don’t stop at a tool or workshop. The only way you can realty tell whether your vision of retirement is realistic is to give it a test drive. Thinking of moving to Key West and starting a small business selling those terrific photos you took of the sunset when you vacationed there for a week last year? Try renting a house in the Keys for a few months and setting up shop to find out if there’s actually a demand for those pictures, not to mention whether the laid-back vibe will lose its appeal after a few weeks. Better to find out whether your vision of an ideal retirement jibes with reality before you relocate than after.
4. Crunch Some Numbers: Once you’ve decided how you want to live in retirement, you’ve got to make sure you can afford that lifestyle. Can the combination of Social Security payments, your pension and reasonable draws from your 401(k) or IRA really support your condo in the city, that mountaintop retreat you want to buy and all the traveling you plan to do?
The only way to really know is to estimate the cost and compare it to the income your nest egg and other sources will generate. If the outlays for your dream retirement exceed your likely income, you can either dial back your “must-have” list a bit, or put in a few more years on the job so a larger nest egg and higher Social Security payments can give you the cash flow to do the Full Monty.
5. Assess Your Social Connections: As important as financial security is in retirement, a Merrill Lynch study found that, after retiring, people missed the social connections they had through work even more than they missed the regular paychecks. Indeed, other research also shows that retirees who felt satisfied with the number of friends they had were almost three times more likely to be happy than those who felt they came up short on the friendship front. Along the same lines, retirees who volunteered or attended some form of worship were likely to feel more content than those who rarely or never volunteered or attended religious services.
I’m not at all suggesting that you’re doomed to a life of misery if you’re not a social extrovert or you’re not particularly religious or spiritual. But having a social network of friends and family that can provide companionship and support in times of need can be as important as having financial reserves that you can fall back on.
Walter Updegrave is the editor of RealDealRetirement.com. If you have a question on retirement or investing that you would like Walter to answer online, send it to him at firstname.lastname@example.org.