Meet Kate. A former healthcare executive, her successful career enabled her to retire at age 53. But, as it turned out, her post-working life was not as successful:
I thought that everything would be fabulous because I was still young and could do all the fun stuff I’d always wanted to do. One of the things I didn’t consider was that while I was really busy after I retired, it was just a task-driven existence. I wasn’t doing the things that gave me satisfaction. And I failed miserably at retirement because I hadn’t given any thought to what I would do when I was retired.
Her “failed” retirement ultimately led Kate to return to work—the place that gave her a needed sense of purpose and fulfillment.
Does this story sound familiar? If so, you may not find these statistics surprising:
- 67% of married couples experience increased marital conflicts in the first two years after retirement.1
- Retirement boosts the risk of depression by 40%.2
So, what’s going on here? This report offers some clues.
A sugar rush
A 2012 study from the Journal of Happiness Studies found that people feel a “sugar rush” of well-being and satisfaction immediately after retirement, but it’s soon followed by a sharp decline in happiness.3 What’s more, according to the study, most retirees went through this “rush then crash” pattern regardless of the age they retired.
Of course, your financial advisor is helping you design a solid plan for your money in retirement. But even if you’ve accumulated sufficient funds in your retirement bucket, experts are beginning to acknowledge that retirement is about more than money: it’s about spending time doing activities that not only engage you but give your life meaning. In fact, having a plan for your life in retirement may be even more important than the money you bring to it.
Recognizing the significance of purpose in our post-working lives, many researchers now believe that the formula for a successful retirement is no longer simply: "money equals a fulfilling retirement," but rather, "purpose plus money equals a fulfilling retirement."
The 3 P’s
In retirement, time can become your “frenemy.” Consider this: every day is Saturday in retirement. That means you will have twice as much time on your hands as while you were working—16 hours—to fill every day.
Like Kate, you may dream of a fun-filled, leisure-based retirement. But without a plan in place for how you will spend the next 10, 20 or 30 years, retirement could quickly become endless weeks, months, years devoted to activities intended to distract you from boredom instead of activities that ignite your passion.
As retirement approaches, it’s important to step back and take stock of what you want your life to be when you’re no longer working. Not only will this self-reflection help focus your mind, but it will also assist your advisor in tailoring a financial plan that will enable you to pursue your ideal post-working life.
"As retirement approaches, it’s important to step back and take stock of what you want your life to be when you’re no longer working."
To get started, let’s take a look at the part that People, Place, and Passion play in a long and happy retired life.
Human beings are social creatures, and social connections are more essential than you may think. To be sure, studies show that positive social interaction is good for our health—and not in some abstract way, but in tangible, medically measurable ways: lower blood pressure, improved cognitive function, a stronger immune system.
When you leave the workplace for the last time, you’re also leaving behind people you may have seen and interacted with every weekday for years. Losing those connections can lead to feelings of isolation and loneliness.
So, how do you guard against losing social connections? How can you maintain meaningful relationships or create and build new ones? Those are big questions—and the time to start seriously reflecting on them is not the day after you retire. It’s now.
The second of the 3 P’s, place is another important consideration. Where you choose to spend your senior years can have an impact on your overall well-being in retirement.
Here are some questions you and your advisor should mull over that will help you decide where to make your home.
- Why do you live where you live? Did your career take you there? Did you move for a better school district?
- If you want to stay put, should you consider downsizing? Renovating for future needs?
If the reasons you live where you do no longer exist, for example, you’re ready to retire and your kids are grown and gone, does it make sense to stay? If as empty nesters you don’t need as much space and don’t want the responsibility of taking care of a large home and yard, does it make sense to stay?
As with people, it’s best that you think about your place in retirement before you retire, not after.
What excites you? What gets you fired up or emotional? What brings you joy? That’s the definition of passion, the third of our 3 P’s.
Perhaps shockingly, 52% of Americans don’t love what they do.4 Retirement presents you with an opportunity to reinvent yourself, to follow your heart and immerse yourself in the things you care most about.
If the daily grind has prevented you from uncovering your passions, let alone contemplate how you’re going to follow them in retirement, answering these questions may be a good place to begin.
- What’s on your dream list? – Anything you’ve always wanted to do.
- What’s on your curiosity list? – Something that has always fascinated you.
- What’s on your mastery list? – Something you’ve always wanted to get good at.
Although purpose isn’t tangible – and it can be hard to pin down – discovering your purpose will empower you to succeed in retirement.
In fact, neuropsychologist and behavioral scientist Patricia Boyle believes that purpose is a very real predictor of how well people will live and thrive as they age. Those who feel their lives are meaningful live longer, and they’re less likely to develop disability, suffer stroke, develop Alzheimer’s disease or suffer cognitive decline.
Bottom line, an effective plan for retirement should take into consideration your financial as well as emotional needs during what is undoubtedly one of life’s biggest transitions.
Building your plan
People. Place. Passion. Purpose. They’re essential to living your best life in retirement. But to get there, to find your way to the best life, you need a plan. So why not enlist someone who can help you prepare for life – not just for retirement? After all, you’re a person, not a portfolio.
Here’s where your financial advisor comes in. He or she not only can serve as a trusted sounding board but can also provide the guidance you’ll need to build a holistic plan with purpose – one that reconciles your life goals with your finances – that can be a path to a rewarding retirement, in more ways than one.
Investing involves risk, including possible loss of principal.
The opinions and forecasts expressed are those of the author and individuals quoted and should not be construed as a recommendation or as complete.