If you’re planning to retire this year, you should start putting your finances in order now. That’s a given. But retirement isn’t just about money. It’s about how you will spend your time. So you might also start thinking hard about what you’ll do next.
On the financial front, the Wall Street Journal offers a simple list to prepare for retirement in 2012, including tracking spending, getting real about how far your nest egg will go, sorting out Social Security, and building a cash reserve. The article saves the best advice for last: get ready emotionally.
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How do you do that? Think in terms of retiring to something, not retiring from something. The Journal quotes Jonathan Guyton of Cornerstone Wealth Advisors in Minneapolis:
“If your definition of retirement is framed in terms of what you are leaving, you are setting yourself up for a much more difficult transition emotionally. Even if it’s just some relatively small thing that you are energized about and this is something you get to do right now … you generally do much better.”
Staying busy at something you enjoy has been a central theme of mine for years. It’s at the core of two books I wrote with Ken Dychtwald (The Power Years and A New Purpose) and many of my columns and posts. Today’s retirees should plan to live for 30 years after quitting their long career. What will they do with all that time? It’s a critical consideration.
Leaving work for good can be such a jarring change that many advise phasing into retirement – first scaling back your hours and responsibilities, or maybe taking a part-time hobby job, so that you don’t suddenly have an endless amount of time to fill. This strategy has the added benefit of keeping some wage income, which will help stretch your nest egg.
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The mutual fund company T. Rowe Price has another idea. The firm advocates what it calls a “practice retirement.” This entails staying on the job longer either full-time or part-time. But instead of saving like crazy, use your continuing income to take dream vacations, fund a hobby or splurge in other ways that will help you explore how you want to spend your time when you finally quit work for good. In a typical case, T. Rowe Price found, working a few extra years—and spending the 15% of income you might have been saving—produced 31% more retirement income.
For those who must work longer than they expected, practicing retirement is a way to enjoy life right now; it’s about exploring how you’ll spend your time when you have more time. We’re way past five years of bingo at Sun City before the funeral. Retirement today is about the opportunity to start another chapter. It’s about retiring to something, not from something. Getting that part right before you leave work is as important as the financial stuff.