A lot of people spend years, even decades, planning their retirement. But ironically, even with that much time, they overlook one big factor.
With the help of their financial advisors, they determine how much to save, where to invest and how much risk to take, then forecast their lifestyle and associated living expenses in retirement. However, retirement planning is more than just calculating “the numbers.”
In our opinion, retirement planning should include marrying the financial and non-financial aspects of life. In other words, don’t forget to consider the qualitative side, like how you will spend your time. You can sacrifice your lifestyle for decades to save an adequate amount to retire on and get all the financial projections right, but if you don’t consider how you’re going to spend your time, there is a chance you won’t feel fulfilled.
The average worker in the U.S. works 1,779 hours annually. That’s a lot of newly found free time in retirement! When thinking about how you’ll spend your time in retirement, there are 3 important non-financial aspects you should ponder.
1. Who are you going to spend your time with?
Maintaining social connections is essential to a fulfilling and healthy retirement. If you’re close to your colleagues, you may feel isolated at home, especially if you live alone. It’s important to maintain contact with friends and family to avoid those feelings. So, consider who you’ll be spending time with when you retire. Do you have a spouse or partner? Do you have kids who live nearby? Grandkids? Acquaintances from various hobbies or groups you plan on getting involved with?
2. Where are you going to be?
Where you plan to live is going to greatly affect how you spend your time. Although many of us would love to live out our days in our family home, sometimes it’s not possible. An illness may force you to move to a continuing care retirement community.
According to the U.S. Department of Health and Human Services, 70 percent of individuals turning age 65 today will need long-term care services at some point. While additional financial planning is often needed to cover the substantial cost of these facilities, don’t forget to prepare yourself mentally for the possibility of having to leave your home.
Some folks may want to stay in their family home forever – the surroundings are well known and provide comfort. But maybe you don’t want to stay put when you retire and prefer to live closer to grandkids. Perhaps you daydream about moving to a warmer climate. Moving to a state with lower taxes could help you stretch your retirement income. Selling your family home may have a positive effect on your finances, but you’ll need to consider the emotional effect it could have.
As you can see, there is a lot to consider here.
3. What are you going to be doing?
Retirement is the perfect opportunity to rediscover who you are outside the workplace. You’ll likely finally have time to indulge in hobbies, such as working on your golf game. You may wish to help your kids by babysitting the grandkids on a regular basis. It can also be a good time to give back to society by volunteering with local charities or community groups.
Or perhaps you’re not ready to hang up your boots yet. Working part-time will not only boost your retirement income, but can provide social interaction. The aim should not be to fill your time with activities, but to spend time doing things you enjoy and that are important to you. Remember, retirement is a time to retire to something and not from something.
It is critical to consider these 3 non-financial questions when planning for retirement. These questions will not only help you prepare yourself mentally for retirement, but the answers will likely impact your spending.
As you see, planning on how you will spend 20, 30 or even 40 years in retirement takes some careful thought. While a financial advisor can help you calculate how much is “enough,” your input to the above questions will be invaluable.
Gary Williams, CFP®, CRPC®, AIF® and Nicholas Ibello, CFP®, AIF® are Wealth Managers with Williams Asset Management. Williams Asset Management is located at 8850 Columbia 100 Parkway, Suite 204, Columbia, MD 21045. They offer advisory services as Investment Adviser Representatives of Commonwealth Financial Network®, a Registered Investment Adviser. Fixed insurance products and services offered by Williams Asset Management. For additional information about the services of Williams Asset Management, please call (410) 740-0220 or email at Info@WilliamsAsset.com. © Williams Asset Management. For more information about Williams Asset Management, please visit http://www.williamsassetmanagement.com/.
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