What do you think of when you hear the word “retirement?” Our imaginations, and actual outcomes, vary wildly when it comes to retirement. You might imagine an older couple in great health traveling the world, relaxing on a beach somewhere. There are many retirements that look like this. Or you may imagine someone who didn’t save enough while they were working, so they are getting by solely on Social Security. There are also many retirements like this.
You only get one chance at a successful retirement. Besides the basics like saving more money, what can you do to ensure a successful retirement? What insights can we gain from those who are already retired to better plan our own retirements?
1. Retirement is better than working
The majority of retirees, 67%, are happier on a typical day in retirement than they were on a typical day while working. Of the 33% who are not happier in retirement, about half say they are lonely. It’s no secret that loneliness is a leading cause of unhappiness and depression in older Americans, and having a network of family and friends that you regularly see can help ward off loneliness in retirement. Consider living in a community where many of your neighbors are also retired. You don’t necessarily need to move to The Villages, but having close friends and neighbors who are also retired can prevent loneliness.
2. Take care of your health
Being in good health can make or break your retirement. Of retirees that reported being happier in retirement than they were while working, 49% of them said they planned ahead by prioritizing their health before retirement. 44% of retirees are concerned about their finances in retirement, while 34% say health issues are their biggest concern. Saving for retirement and taking care of your health must go hand-in-hand. If you don’t take care of your health, it doesn’t matter how much you have saved for retirement. Just like it is never too early to start saving, it is never too early to prioritize your health.
3. If there’s something you want to do in retirement, don’t wait to do it
There’s a big gap in what we imagine doing in retirement, before we retire, and what we actually end up doing in retirement. The top activities pre-retirees imagine for retirement are traveling (79%) and exercising (71%). That makes a lot of sense. Traveling extensively can be difficult to do while employed, and it’s a common dream to “travel the world” once you retire. And exercising to stay in good health is another great goal. However, the top activity for current retirees isn’t traveling or exercising but watching TV.
Don’t take anything for granted in retirement. If there’s something big you want to do or accomplish, make concrete plans now instead of potentially waiting until it’s too late.
4. You might worry less about money
Interestingly, many retirees report worrying less about money than those who aren’t yet retired. 34% of pre-retirees are worried they will outlive their money, while only 22% of retirees fear the same. 46% of retirees say they have fewer financial problems than they anticipated before retirement. This may sound strange, but it’s how it should be: worrying about money, and adequately planning, before retirement can make it much less of an issue in retirement. 78% of retirees say they have more than enough or just enough money to last them through retirement, while 19% say they have less than they need.
It should be encouraging that a large majority of retirees believe they have enough money to last them through retirement, and many worry about money less than they did before retirement. This doesn’t happen without planning ahead and saving what you know you need to save for retirement.
5. When you retire matters
The period of higher inflation we’ve experienced since 2020 will likely go down in history as not the best time to retire. In 2020, before inflation had really started impacting retirees, 17% said their spending was a little higher or much higher than they could afford. Last year, 31% of retirees said their spending was a little higher or much higher than they could afford. Periods of higher inflation often hits retirees the hardest since many are on fixed incomes, with pensions that may not adjust for inflation and Social Security, and the last few years have been no exception.
When planning for your own retirement, it’s a good practice to hope for the best but be prepared for the worst. What happens if inflation skyrockets when you retire? Or what happens if you retire at the beginning of a prolonged stock market decline? Make sure your retirement plan is ready for the worst-case scenario.
Retirement is an exciting period of life if you’ve prepared well. Listen to those who are retired now and prioritize your health, make plans to accomplish your goals, whether that’s traveling, spending more time with friends and family, or something else, and be prepared to worry less about money and be happier than you were while working.
