Packing It In: Retirement Beckons But Also Threatens
For your convenience here is the audio version of this article. Press Play to listen.
Retirement has its pros and cons. We can no longer afford to view retirement thru the same lens as the previous generation. And for most of us, our savings and investments don’t afford for that luxury.
But every threat is also an opportunity in disguise.
Team Vippi uncovers options and opportunities at retirement for your consideration.
This is it. You’ve slogged your ass off for your entire life and sacrificed self indulgence while squirrelling funds into a little pot. And now, your retirement is around the corner.
The idea of your job coming to an end might feel like sweet, sweet relief, it may play out something like Golden Girls or The Best Exotic Marigold Hotel. Your time might be long overdue, or you might be facing an early retirement. You may have a surplus of wealth or a shortage of health – you could be sick or responsible for someone who’s sick, like a parent or partner.
You’ve absolutely earned the right to look forward to retirement, but it’s worth thinking about it tactically so you can really get the most out of it. You can stop working and call it retirement, sure – but retirement is a mindset. Retire, don’t retreat. There’s no need to back off from living.
That being said, you’ll need to plan. You only get one retirement, and you need to make it amazing. You’ve earned it.
Team Vippi will break down the pros and cons of retirement – what to look forward to, ways to be cautious, and how to plan so that you can spend it sipping Daiquiris instead of pinching pennies.
The Big Chill: Why people look forward to retirement
Retirement is an oasis on the horizon, a desert mirage that seems to get further and further away for later generations who approach it. If you were born after 1955, you’ll get to retire at 67 years old. Your kids will be lucky to retire at 70. Their kids? We dread to think.
Retirement is, in short, your swansong. You work, scrimp, and save your whole life to reach those blissful moments of peace where you aren’t over-obliged and underappreciated. It’s time to drink in the glow of a lifetime of achievements, the family you’ve nurtured, and a financial nest egg you can use as you please.
- Freedom: You can finally see who you want at any time of day, engage with the causes that mean the most to you, and invest in your passions for the rest of your life. The amount of guilt people of working age are (wrongly) made to feel when they turn their attention in any single direction can be intense. That’s over now.
- Relaxation: You can finally just unwind when you feel like it. Want to spend a day reading? Go for it. Fancy birdwatching in the garden for hours at a time? Those hours are yours now. In fact, one of the most overwhelming parts of retirement involves finding structure and keeping your mind busy.
- Family: You can now really be there for your children and grandchildren, getting truly involved in the little moments. You can also act as a family facilitator, throwing lunches and dinners for the people you love. They’ll care for you, and you can care back – it’s a glorious cycle.
- Stress reduction: There’s no employer breathing down your neck and no schedule to stick to (apart from any medications you may take and your social calendar). With relaxation can come a drop in stress levels, a slower pace of living, and a more measured and placid outlook on the world. You are now the boss of your own life. Let it sink in.
Whether you get the most out of retirement also depends on the reasons that you’re retiring. If you’re packing up your work desk due to sickness or having to be a caregiver, it may not be the final hurrah you expected all those years ago.
The trick to having a full and fulfilling retirement is to maximize these joyful elements and plan so that the more draining elements don’t knock the wind out of you emotionally and financially. What you have on your side is wisdom – you’ve made it through a whole life of lessons. Hindsight is 20:20 – so even with your cataracts, you’re looking back on more than most people, meaning you have more clarity.
Wield that clarity like your happiness depends on it – because it does. For the first time in your life, enjoy living in the moment.
The threats of retirement
You could have a huge pension pot, a sprawling property, and more companions than you know what to do with, and you’re still not protected from the tougher elements of retirement. That’s the kicker when it comes to old age. You have to plan ahead to make it easier.
Financial risks include:
- Outliving your assets: We all want a long, happy, healthy life. However, if you retire at 60 years old and have to support your household for another 40 years, you’re going to run into some money problems unless you’ve got a large enough pension.
- Losing a spouse: Aside from the emotional impact of losing an extremely long-term partner, the medical and memorial processes are supremely expensive. This is going to put a dent in your savings.
- Losing daily function due to health problems: You or your partner might require daily care that means you need to live in a 24-hour facility. Insurance plans often do not include live-in care or daily assistance in their coverage. These costs can amass to over $2,000,000 per couple over the course of a lifetime.
- Out-of-pocket medical expenses: Especially in the U.S., medical treatment is outrageously expensive, even if you have insurance. As you age, your risk of chronic disease, fractures, and degenerative issues with sight and hearing dramatically increases. If you’ve not got the right health coverage, your bank account is headed for a major shock.
- Inflation: What you saved back in the nineties won’t be valued the same now. This can make what seemed like an ostrich-sized nest egg 40 or 50 years ago look more like that of a robin in 2021. (Good job you’ve been keeping up with your birdwatching, eh?) This means that you may still need to make allowances and adjustments even though you’ve been diligently saving.
It’s not only your pocket that will take a hit. The emotional risks include:
- Boredom. You might have been incredibly passionate about your job, only to find yourself anxious or depressed once you’re free of it. Purpose is important, and many people tie their purpose to their line of employment.
- Grief. You are going to grieve for several friends, family members, and maybe even your partner. If you’ve somehow escaped grief up to this point, get ready – it’s going to be a bumpy ride. You have to prepare yourself.
- Medical problems. Your body is going to start giving up on you and force you to cancel plans, vacations, and activities. You’re going to need to relearn how to function with aching bones, poor eyesight, and regular medications. You may well have all the freedom in the world and none of the energy or movement to enjoy it.
- Too much time to think. This becomes what you make of it. But you need to learn to keep your brain active, otherwise you could end up becoming introspective, isolated, and – it bears repeating – very, very bored.
- Loneliness. Words can’t really capture the loneliness of a retired widow or widower. The grief passes, and you still have to contend with the oppression of feeling alone all the time. And even if you still have family, they have their own lives and priorities and won’t always be around to provide company. This takes real energy and dedication to overcome. The National Institute on Aging found that loneliness can increase the risk of high blood pressure, heart disease, anxiety, depression, cognitive problems, Alzheimer’s, and even death itself.
These are drawn out, expensive, and deeply unpleasant downsides to retirement. You have got to make sure you’re living every day to the fullest and keeping the worst effects of aging at bay.
Ways to make retirement easier
Don’t panic – retirement is still a nourishing life choice that can free your mind, possibly make you healthier than those who continue to work (according to a 2019 study), and maybe even help you live longer.
There are steps you can take to keep the joy in your retirement:
- Find ways to save more. Increase the amount you put into your pension at work, or try a phased retirement plan where you gradually dip into your benefits while working part time and phase out of work.
- Do some math. (Alternatively, use online calculators to do it for you – the AARP offer a really handy tool to help you plan ahead.) Before you pack in your job ask yourself: Are you saving enough? When can you afford to retire? And how long will those savings last?
- Check your medical insurance. Start looking at Medicare early (generally, you can enroll from 65 years of age) and gain an understanding of how it works. You might need to take out an extra Medigap policy to cover your out-of-pocket costs. If you pay for private medical coverage, make sure you have a competitive policy that accounts for your health needs. Either way, ensure that your provider won’t leave you in the dark at the worst possible moment.
- Look at your current health status and make projections. If you smoke, are overweight, and have volatile blood pressure or blood sugar levels going into retirement, you can put good money on having type 2 diabetes and cardiovascular disease further down the line. Cancer is another wolf at the door entirely. You can never 100% predict your health outcomes, even though it can help to take a home genetic test, like a 23andme pack, or look at your family histories of heart disease, cancer, and diabetes. Make healthy decisions around diet and physical activity now, and your life will be easier later on.
- Make sure both you and your partner have life insurance policies. Ideally, ensure they list each other as beneficiaries to account for funeral costs. There is a life after death for the bereaved. Make sure you have enough funds remaining to provide for that life. You really never do know what’s round the corner.
- Assess your personal values. Knowing what you hold to be truly important will help you decide how best to spend the final stage of your life in complete freedom and without guilt or regret. Do you want to put more time into your House of Worship community? Volunteer at animal shelters? Plow more time into an art, craft, or hobby you enjoy that work robbed from you? Travel? Dedicate every waking second to your family? The freedom can be overwhelming, but your values will help you pick a path and find a balance.
- Buy a pension plan that makes cost-of-living adjustments to offset inflation, at least a little. More retired people than ever are also investing in the stock market to try and make retirement a little more lively, although that can certainly be volatile. It may be worth meeting with a wealth consultant to see how you might make those funds stretch in light of inflation. You can also reduce what you spend each month by downsizing your lifestyle. You’ll likely not be mobile enough to make it all the way around a large home, you can save money, and it can be therapeutic to do more with less. Start a new chapter in a smaller living space.
- Hold your people close. Grief is hard enough without the regret of not having spent time with people you care about. Learn to forgive minor grievances, make time for others, and have deep, enduring, and long conversations – about everything. Your holidays and hobbies will make retirement fun. Your people will make it meaningful.
- Be social. Staying social can turn your golden years to platinum. Join a swimming club or golf club. Start making the most of a pensioners’ dance class, book club, or your local House of Worship’s social calendar. Loneliness can be horrifying for older folk, and you need to make sure you have friends through both the good and bad times. Staying social can keep you active, help your brain stay sharp, and keep your life colorful and forward-moving, especially since it no longer revolves around work.
- It’s time – leverage technology. You were alive for the first moon landing, and you’ll be damned if you let these gadgets get the better of you. Better still, use them to your advantage. Get up to speed with tablets, laptops, and smartphones. Annoy your grandchildren on Facebook (and impress them with your newfound tech savviness at the same time). You’ll even have time to start a business from home on sites like Amazon or Etsy if you’re craft-minded or have antiques to trade. Technology isn’t your enemy. In fact, it becomes more user-friendly all the time.
- Have fun. All this talk of illness, death, and stretched finances might lead you to believe that fun is out of the question. But that’s pretty far from the truth if you have the right approach. You can rely on fun being around the corner as a retiree if you’re savvy about planning and give yourself as few reasons to worry as possible.
Retirement is a gift. If your job has a good pension, or you’ve been saving enough, you stand a good chance of having an enjoyable, relaxing, and enlightening twilight period.
However, illness and bereavement can toss huge wrenches into your savings and your emotional resilience. Make sure you’re ready for anything that might come your way.
You’ve no reason not to be optimistic if you’re also smart about how you approach your pension years.
- AARP retirement calculator: Are you saving enough? (2019). https://www.aarp.org/work/retirement-planning/retirement_calculator/?cmp=RDRCT-f85863aa-20200401
- Born In 1955 or later? You may have to work until you’re 67. (n.d.). https://www.aarp.org/content/dam/aarp/money/retirement_planning/2014-12/social-security-and-work-aarp.pdf
- Carlson, B. (2021). How to beat the three greatest retirement risks. https://www.forbes.com/sites/bobcarlson/2021/01/19/how-to-beat-the-three-greatest-retirement-risks/?sh=386a16df64c8
- Felman, A. (2019). What to know about cardiovascular disease. https://www.medicalnewstoday.com/articles/257484
- Watson, S. (2020). Everything you need to know about diabetes. https://www.healthline.com/health/diabetes
- Global health and aging. (n.d.). https://www.who.int/ageing/publications/global_health.pdf
- Insler, M. (2014). The health consequences of retirement. http://jhr.uwpress.org/content/49/1/195.short
- Look Jr., J. (2019). Want to live longer? Retire early. https://www.forbes.com/sites/jonathanlookjr/2019/07/08/want-to-live-longer-retire-early/?sh=4b81ee1a319b
- National Institute on Aging. (2019). Social isolation, loneliness in older people pose health risks. https://www.nia.nih.gov/news/social-isolation-loneliness-older-people-pose-health-risks
- Phased retirement information. (n.d.). https://hr.nih.gov/benefits/retirement
- Society of actuaries. (2004) Risks of retirement – key finds and issues. https://www.soa.org/globalassets/assets/files/research/projects/risks-of-retirement-k-5951e.pdf
- What Medicare covers. (n.d.). https://www.medicare.gov/what-medicare-covers
- What’s Medicare Supplement Insurance (Medigap)? (n.d.). https://www.medicare.gov/supplements-other-insurance/whats-medicare-supplement-insurance-medigap
https://www.forbes.com/sites/bobcarlson/2021/01/19/how-to-beat-the-three-greatest-retirement-risks/?sh=386a16df64c8 – beating the risks of retirement
https://assets.aarp.org/www.aarp.org_/articles/work/pension-colas.pdf – cost of living adjustments