Are You Ready For Retirement? It’s Not Just About Your Finances

By Hightower Westchester on June 1, 2020

You have worked a long time, maybe 30-40 years, maybe in one career or many, maybe for one company or many, and you’re thinking it’s time to hang up the cleats, cash out, add your own retirement euphemism here_____________.

Having been a wealth manager for almost 30 years, I’ve learned there are two very distinct parts to retirement, the subjective and the objective. The latter is much easier to figure out. We work with our clients building their personalized financial plan by gathering all the data for their spending, their savings or investments, sources of income while they are working and sources of income in retirement. Those sources might include Social Security if you are old enough, it’s worth noting that we usually suggest deferring this as long as possible (read our blog about when women should take Social Security), company pension if you have one, 401k or other type of tax deferred savings plan, your own savings, IRA’s, etc.

We take all of this data and run a forward projection of how long your money will last in retirement, and then we can OBJECTIVELY state whether the plan will likely succeed or fails.  Then you, the client, can make an informed and intelligent decision as to IF you can afford to retire.

While this might sound complicated and tedious, gathering all the data and crunching the numbers is the easy part. My experience is that clients have a much harder time with the subjective part…what to do with all that time? If you assume the average American works 40 hours a week, and you add another 10 hours for commuting time, then you have 50 hours a week that were dedicated to “work”. There are 168 hours in a week, and you sleep for roughly 50 of those hours, you have to find things to do to fill almost 50 hours a week other than sleeping, so it’s about 1/3 of the time in an average week, or about 42% of your waking hours. In the beginning, you may rearrange the furniture, work on checking things off the “honey do” list, and binge watch your favorite TV shows, but what are you going to do when those things stop being fun after a few weeks? This is where the real thinking comes in about how you are going to spend your time.

I have helped many clients retire and the financial part, as I said, is easy, the challenge is filling the time. I have seen clients retire successfully and others not so much. Those that have succeeded are the ones that have things to do beyond the “honey do” list.

There’s one client the stands out above all others when it comes to retiring successfully. He retired shortly after I started in my career.  He was a physician, and as tough as it was to get hold of him while he was working, it became even harder when he stopped. He was constantly out doing things.  He learned all about computers, remember this was almost 30 years ago when computers were big and boxy, he went swimming several days a week, he volunteered at numerous places, he was constantly taking courses at the local community college, and he even found time to travel. He was mentally engaged. And so, when he became physically unable to do all these things, his mind was still sharp as a tack and he was engaged almost until the end. He passed away about 10 years ago, but the 20 years or so he spent retired I bet were some of the most rewarding times in his life, and this was after a professional life spent healing the sick.

The other big trend I have seen in retirement is that the myth of stopping cold turkey and just sitting on the rocking chair just doesn’t happen. I have seen multiple clients retire only to go back to work and the skills they honed over 30 plus years.  Maybe they just go back part-time, maybe they consult and pick and choose the project they want to work on, or maybe they decide they can take their skills and donate them, not their actual skills, but their time and expertise to help a local or national non-profit.

I just spoke to a client that retired last year, his wife is still working for a couple more years and after we did a financial plan for them, he realized he could retire.  He was the Executive Director of a non-profit, so service is what he did for a living.  He was nervous at first, but then threw himself head-long into all types of other work.  He’s become extremely involved in his alma-mater, something that was always very important to him, and now he really has the time to devote even more time, and he loves it. He is taking the skills he developed over his career and is giving back to something he is passionate about.

Passion is the key.  Going to work each day doing a job you hate can literally suck the life out of you, but going to work when you enjoy the job, and the people, gives you purpose and energy.  In retirement, the “jobs” you take on should feel the same or even better.

You plan for the financial side of retirement but it’s just as important to plan for the social, physical, and emotional side of retirement. I read a wonderful article that discusses the psychological and emotional side of retirement that I highly suggest you read if you’re looking to retire in the next few years, click here.

My final piece of advice is to take time now, before you retire, to find the passion(s) in your life and figure out how you can take your passion and do something with it.  Going into retirement with a positive outlook and a clear vision of what you want out of it will set you on a path to a successful retirement.

Peter Lang – Managing Director, Partner – Hightower Westchester

914-825-8631 – plang@hightoweradvisors.com